Global Flash PMIs Take Center Stage as Investors Assess Growth Momentum

In focus today

Today’s spotlight is on the September flash Purchasing Managers’ Indices (PMIs) across the euro area, the UK, and the US, which will provide critical insights into the current health of the global economy. In the euro area, the release is highly anticipated as it will shape the European Central Bank’s (ECB) policy outlook. We expect the data to confirm that solid growth momentum persisted through September, with the manufacturing index projected to climb to 53.3 from 52.7, bolstered by new orders and a broader rebound in global activity. On the other hand, services activity is forecast to dip slightly to 51.4 from 51.6, reflecting ongoing consumer caution, though it should still signal expansion. Additionally, the price sub-indices will be closely scrutinised to determine if rising energy costs are beginning to filter through to businesses.

In the United Kingdom, September flash PMIs are also set for release, with expectations pointing to a broadly stable reading. Economic activity has demonstrated impressive resilience throughout the summer, with the August composite PMI reaching 52.5, its highest level since April. While manufacturing continues to drift lower, the services sector has successfully rebounded, emerging as the primary engine of economic expansion.

Turning to the United States, September flash PMIs are expected to maintain a robust expansionary stance, comfortably staying above the 50.0 threshold. Manufacturing is projected at 53.6, while services is anticipated at 56.0. Following strong readings in August, these figures will suggest that US economic activity continues to hold up well against global headwinds.

Economic and market news

What happened overnight

In commodities, Brent crude oil continued its downward trajectory, trading around USD 98 per barrel in the morning session, marking a sixth consecutive day of declines. This downward pressure came as Saudi Arabia progressed with the restart of its East-West pipeline. Meanwhile, geopolitical tensions in the Middle East remained elevated; President Trump used his address at the UN General Assembly to issue a stark warning that he could “annihilate the Islamic Republic” if negotiations failed, adding that a peace agreement is unlikely before the November mid-term elections. Despite the tough rhetoric, US and Iranian officials engaged in their first direct talks since June, facilitated by mediators on the sidelines of the assembly. Although no formal agreement was reached, both parties expressed openness to further discussions. Tehran indicated a willingness to reopen the strategic Strait of Hormuz within seven days, contingent upon the US lifting its blockade on Iranian ports. Currently, prospects for normalising traffic through the strait appear limited.

What happened yesterday

In the euro area, consumer confidence in the region declined more than anticipated in September, settling at -16.5 against a consensus expectation of -16.0 and a prior reading of -15.5. This downturn marks the end of four consecutive months of improvement and is largely attributed to the recent surge in energy costs. While weaker sentiment is expected to dampen private consumption in the near term, the direct correlation between consumer confidence and actual spending patterns has recently been less reliable. Notably, household consumption in the second quarter surprised to the upside, even in the face of higher energy prices and falling confidence.

In geopolitics, a significant Arctic security pact was signed on the sidelines of the UN General Assembly in New York by the US, Denmark, and Greenland. The deal authorises the United States to expand its military footprint in Greenland, establishing two major new facilities at Narsarsuaq and Mestersvig, expanding the existing Pituffik Space Base, and potentially deploying a “Golden Dome” missile defence system. Furthermore, the agreement prohibits non-NATO countries from setting up military installations in Greenland and imposes restrictions on sensitive foreign investments in critical infrastructure and resource extraction. This framework will remain in force should Greenland achieve independence, provided it remains a member of NATO. After a prolonged period of high friction among the three parties, this agreement is expected to provide significant reassurance to NATO and its allies.

In the US, the latest weekly estimate from ADP showed private employment growth came in at 20,000 for the four-week rolling average ending September 5th, an increase from the revised 16,750 recorded the previous week. On its face, this data implies that the US labour market is heating up, with employment growth momentum gathering further speed.

In Hungary, the central bank held its benchmark interest rate steady at 5.50%, matching market expectations and halting its easing cycle following three successive 25 basis point cuts. The bank also announced a downward revision of its inflation target to 2.5% (down from 3%) starting in 2028, stating that the adjustment aligns with the requirements for eurozone adoption.

Equities: Global equity markets concluded a highly nuanced session on Tuesday. What initially appeared to be a broad risk-on rally, triggered by falling oil prices, ultimately gave way to a more divided outcome. Global equities finished just 0.1% higher, with the S&P 500 remaining flat as only 49.5% of constituent stocks closed in positive territory. In contrast, the Nasdaq and the Russell 2000 indices both climbed by 0.5%. Looking ahead to the overnight session, Asian equities are trading with mixed results, while US and European futures point to a modestly positive opening.

FI and FX: US Treasuries experienced intraday volatility but ultimately ended the session virtually unchanged. European fixed income markets also saw a turbulent session, closing slightly higher across the curve in a bear-flattening move, with oil prices serving as the primary intraday catalyst. Brent crude fell to approximately USD 99 per barrel, marking its fifth consecutive day of declines and the longest losing streak since August 2025, driven by Saudi Arabia’s pipeline restart and encouraging signals on Iran talks. Despite the dip in crude and natural gas prices, the Euro FX market traded on weak footing. EUR/USD declined to near 1.1450, while the cyclical currencies of New Zealand (NZD) and Norway (NOK) emerged as the strongest performers within the G10. In the Nordic space, EUR/SEK closed near 11.30, USD/SEK around 9.87, and NOK/SEK held slightly above 1.04.

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