European shares slide on dismal data
AFP – European stock markets fell on Monday after a key survey pointed to weakness in the eurozone economy while some travel and tourism stocks benefited from the collapse of British giant Thomas Cook.
US stocks moved sideways. But both Frankfurt and Paris fell by around one percent after data from a closely watched survey showed that Brexit and trade war fears drove eurozone business growth to its lowest level in six years in September.
IHS Markit’s composite eurozone PMI, seen as a key indicator of business confidence, fell to 50.4 in September, down from 51.9 in August — the lowest reading since June 2013.
It warned that the single currency area’s economy was “close to stalling.”
Market analyst David Madden at CMC Markets UK said “disappointing manufacturing and services reports from France, in addition to Germany, has weighed on European stock markets.”
Investors now need to weigh “German recession odds against central bank support,” added Fawad Razaqzada, market analyst at Forex.com.
– Thomas Cook fallout –
Some rivals of British travel giant Thomas Cook, which declared bankruptcy after last-ditch re-financing attempts failed, saw their shares rise sharply.
TUI shares, listed in London, shot six percent higher.
Ryanair gained 1.4 percent and easyJet 4.5 percent, but British Airways parent IAG shed 1.3 percent.
In Hong Kong, China’s Fosun International lost 1.5 percent after the collapse of Thomas Cook, in which it is the top shareholder.
The price of oil rose amid lingering questions about when Saudi Arabia will fully restore its output following drone attacks on oil infrastructure last week.
Meanwhile, the pound fell against the dollar at the start of a crucial week for Britain with the Supreme Court to decide whether Prime Minister Boris Johnson acted legally in suspending parliament for an extended period as he pushes for Brexit by October 31.
Stock markets were also buffeted after President Donald Trump ruled out a partial trade deal with China, casting fresh doubt on any early agreement.
“Investors remain unconvinced that a trade deal is about to see the light of day soon, and that’s likely to put a cap on any further gains in risk assets,” said Hussein Sayed, chief market strategist at FXTM.
Investors have also been digesting the New York Federal Reserve Bank’s sudden moves to boost liquidity in the financial system and prevent short-term interest rates from rising too high.
New York Fed President John Williams defended the moves.
“We were prepared for such an event, acted quickly and appropriately and our actions were successful,” Williams said.
But he said it remains important to “examine these recent market dynamics” that led to the situations, adding, “we will continue to monitor and analyze developments closely.”
– Key figures around 2100 GMT –
New York – Dow: UP 0.1 percent at 26,949.99 (close)
New York – S&P 500: FLAT at 2,991.78 (close)
New York – Nasdaq: DOWN 0.1 percent at 8,112.46 (close)
London – FTSE 100: DOWN 0.3 percent at 7,326.08 (close)
Frankfurt – DAX 30: DOWN 1.0 percent at 12,342.33 (close)
Paris – CAC 40 DOWN 1.1 percent at 5,630.76 (close)
EURO STOXX 50 – DOWN 1.0 percent at 3,536.97 (close)
Tokyo – Nikkei 225: Closed for a public holiday
Hong Kong – Hang Seng: DOWN 0.8 percent at 26,222.40 (close)
Shanghai – Composite: DOWN 1.0 percent at 2,977.08 (close)
Euro/dollar: DOWN at $1.0992 from $1.1017 at 2100 GMT
Pound/dollar: DOWN at $1.2434 from $1.2478
Euro/pound: UP at 88.40 pence from 88.29 pence
Dollar/yen: DOWN at 107.49 yen from 107.56
Brent North Sea crude: UP 0.8% at $64.77 per barrel
West Texas Intermediate: UP 0.9% at $58.64 per barrel