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Poor US confidence figures send Wall Street lower and take shine off FTSE

Disappointing US consumer confidence figures – following similar data from Europe earlier – has sent Wall Street lower and taken some of the shine off the UK market.

The Dow Jones Industrial Average is just over 80 points lower, having initially fallen more than 100 points after US consumer confidence fell in August to its lowest level for more than two years. The confidence index dropped from 59.2 in July to 44.5, compared to expectations of around 52. The political row over the US debt ceiling and the downgrade of America’s cherished Triple A credit rating by Standard and Poor’s cannot have helped matters.

The figures also may not bode well for Friday’s non-farm payrolls data. Rob Carnell at ING Bank said:

The Conference Board’s index of consumer sentiment [is] approaching some of the worst readings of the Financial Crisis (part 1). Whilst the current conditions index held up reasonably well, the expectations series fell more than 20 points. But whilst this would ordinarily spell a patch of very weak or negative consumer spending, recent spending data have been pretty robust, and this relationship seems to be breaking down somewhat. Indeed, some of the intentions to buy autos or major appliances in the next 6 months expressed in this survey, seemed fairly positive, though these are not very reliable indicators.

The jobs…index has also taken a renewed turn for the worse, and together with the impact of striking workers in the payrolls sample period, is likely to generate a weaker figure than the 105,000 forecast we had been publishing. Something closer to 65,000 now seems more likely. Not a good report then, and in contrast to the buoyant mood of markets in recent days, but perhaps not quite as bad as the headline implies.

In the wake of Wall Street’s fall, the FTSE 100 has pared its gains and is now up 88.43 points at 5218.35, having earlier touched 5283. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds