Global Stocks Absorb Blow of Manufacturing Slowdown
October 02 2019 - 6:45AM
Dow Jones News
By Max Bernhard
-- European and Asian stocks lower
-- Industrial stocks lead the drop
-- Investors await ADP Jobs data
Global stocks fell Wednesday, led by drops in banks and
industrial companies as investors expressed increasing worries
about a global economic slowdown.
The Stoxx Europe 600 was down 1.4%, with Germany's DAX 1.2%
lower and the U.K.'s FTSE 100 down 1.4%. In the U.S., S&P 500
futures were down 0.68%
Markets continued to react to disappointing economic data
published Tuesday showing manufacturing activity was at its lowest
point in a decade in the U.S. The figures came on top of downbeat
data from the European Union, China and Japan.
Steel giant ArcelorMittal and Finnish construction machinery
maker Konecranes were both among the biggest losers in Europe,
falling 3.1% and 4% respectively.
Germany's leading economics research institutes jointly lowered
their growth forecasts Wednesday for Europe's largest economy. They
cited slowing global demand for capital goods, structural changes
in the auto sector -- one of Germany's most important industries --
and political uncertainty.
"There hasn't been a single month this year where Germany has
seen expansion in its manufacturing sector," said Michael Hewson,
chief market analyst at CMC Markets, who expects the weakness in
manufacturing to spill over into the services sector.
Investors are being cautious and "taking cash off the table"
ahead of services and employment figures later in the week, Mr.
Hewson added.
If the manufacturing slowdown spreads to the still robust
service sector, this would increase pressure on the Federal Reserve
to cut rates again in October, said Stefan Schilbe, HSBC Germany's
chief economist.
Bank stocks in Europe fell Wednesday, with the Stoxx Europe 600
Banks index down 1.2%, reflecting unease about falling bond yields,
which crimp lender profits. Banks' performance is also seen as
highly correlated with economic growth. Swiss bank UBS Group was
down 1.7%.
Among individual stocks, shares in U.K. bookmaking business
Flutter Entertainment rose 21% after it agreed to merge with Stars
Group, creating an online betting giant worth more than $11
billion.
European luxury-goods stocks traded lower ahead of an expected
World Trade Organization ruling on the extent of tariffs the U.S.
would be allowed to impose on some European goods, including luxury
items and airplanes. LVMH traded 2.2% lower, Burberry was down 2.7%
and Kering traded 3% lower.
In Asia, Korea's Kospi was down nearly 2% following news that
North Korea fired at least one missile off its east coast. The
move, seen as a show of strength, came after Pyongyang said it
would resume official nuclear talks with the U.S. In Japan, the
Nikkei fell 0.5% and Hong Kong's Hang Seng was down 0.2%. Mainland
Chinese stock markets were closed for a holiday.
In commodities, oil futures for Brent crude fell 0.3% to $58.69
a barrel.
The yield on U.S. 10-year Treasurys was slightly lower at
1.625%, from 1.638% Tuesday. Bond yields and prices move in
opposite directions.
Looking ahead, investors will eye the ADP National Employment
Report for signs of any cracks in the U.S. job market. Plus, Ford
Motor Co. will report third-quarter sales.
Write to Max Bernhard at Max.Bernhard@dowjones.com
(END) Dow Jones Newswires
October 02, 2019 06:30 ET (10:30 GMT)
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