Global Stocks Pressured by Weak Data, Tariff Threat
October 03 2019 - 06:52AM
Dow Jones News
By Avantika Chilkoti
-- U.S. stock futures rise
-- Asian stocks drop, European shares flat
-- Oil prices dip
Global stocks wavered Thursday as expectations of fresh U.S.
tariffs on European Union exports added to investor concerns about
world economic growth.
In the U.S., futures for the S&P 500 gained 0.4%.
The Stoxx Europe 600 was flat in late morning trade, after
suffering its worst performance this year on Wednesday. In Asia,
Japan's Nikkei was down 2% and Hong Kong's Hang Seng closed up
0.3%. Stock markets in China and South Korea were closed on
Thursday.
U.K. stocks were a weak spot in the region, with London's FTSE
100 down 0.5% and the FTSE 250 down 0.4% after a weak reading on
the country's services sector and amid fresh Brexit tensions.
The U.K. services purchasing managers index on Thursday hit a
six-month low of 49.5, below the 50 level that marks contraction.
The new figures reignited concerns that the economy is in
recession, analysts at Capital Economics said in a note, adding
that economic performance will remain "well below par" while Brexit
negotiations drag on.
Meanwhile, European officials gave a cool response to British
Prime Minister Boris Johnson's new proposals to break the deadlock
over Brexit just weeks ahead of the U.K.'s scheduled exit from the
European Union.
Fresh data also added to the gloomy outlook for the broader
European economy. The IHS Markit composite purchasing managers
index fell to 50.1 in September from 51.9 in August, the lowest
reading since June 2013.
Still, new figures from Eurostat showed retail sales in the euro
area were up 0.3% over the month of August, following a 0.5% drop
in July.
Investors were also still digesting news that the U.S. will
impose new tariffs on EU goods, including jetliners Irish and
Scotch whiskies, cheeses and hand tools, starting later this
month.
"The total size or volume of tariffs being applied to what does
amount to quite an array of goods is actually very small when you
consider just the goods trade between the U.S. and the European
Union," said Matt Cairns, rates strategist at Rabobank.
Shares in Airbus were up 3.2% on Thursday, while Pernod Ricard
gained 3% and Rémy Cointreau was up 5%.
Among the biggest gainers in Europe was fashion retailer Hennes
& Mauritz. Its shares gained 6.4% after the company reported
its third-quarter earnings, which showed a 6% rise in net sales
with a reduction in markdowns helping operating profits.
The yield on U.S. 10-year Treasurys dropped to 1.577% on
Thursday, from 1.594% on Wednesday. Bond yields and prices move in
opposite directions.
The WSJ Dollar Index, which measures the currency against a
basket of its peers, was flat.
"The economy is fine without further escalation of the trade
war, but what does an investor really have in terms of the next
step in trade wars?" said Emiel van den Heiligenberg, head of asset
allocation at Legal and General Investment Management. "No one can
really predict what Trump will do next and that makes investors
nervous."
Among the biggest gainers in Europe was fashion retailer Hennes
& Mauritz. Its shares gained 6.6% after the company reported
its third-quarter earnings, which showed a 6% rise in net sales
with a reduction in markdowns helping operating profits.
In commodities, global oil benchmark Brent crude dropped 0.2% to
$57.55 per barrel. Gold dropped 0.1%.
Later Thursday, investors will be watching for data on U.S.
services activity in September, as well as August factory orders,
for clues about growth in the world's largest economy.
Joanne Chiu contributed to this article.
Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com
(END) Dow Jones Newswires
October 03, 2019 06:37 ET (10:37 GMT)
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