European Stocks Fall on Weak German PMI Data; Asia Mixed on US-China Trade Concerns

The major Asian stock indexes posted mixed results on Monday as investors expressed concerns over the prolonged U.S.-China trade dispute with high-level trade talks set to begin in early October.
James Hyerczyk
European Shares Asian Markets

The major European stock indexes are trading sharply lower on Monday shortly before the U.S. opening. Shares are being pressured at the start of the new week following the release of fresh data from the Euro Zone’s largest economy that suggested an ongoing economic slowdown could be worsening, and the prospect for a rebound remains dim.

At 09:19 GMT, the U.K.’s FTSE 100 Index is trading 7288.92, down 56.00 or -0.76%. Germany’s DAX is at 12281.16, down 185.85 or -1.50% and France’s CAC is at 5628.40, down 62.38 or -1.10%.

According to reports released earlier on Monday, German Manufacturing PMI came in at 41.4 in September, down from August’s 43.5 and well below analyst estimates of 44.6.

The German Services PMI came in at 52.5, a decline from August’s 54.8 and well below expectations for a reading of 54.3. The Composite PMI came in at 49.1, below the 51.7 forecast.

“Another month, another set of gloomy PMI figures for Germany, this time showing the headline Composite Output Index at its lowest since October 2012 and firmly in contraction territory,” says Phil Smith, Principal Economist at IHS Markit. “The economy is limping towards the final quarter of the year and, on its current trajectory, might not see any growth before the end of 2019.”

The deep slump in manufacturing suggests the economy could be approaching recession. The economy shrank in the second quarter of 2019, and a subsequent quarter of contraction would signal a technical recession.

In the U.K., shares were being pressured by the collapse of British tour operator Thomas Cook early Monday, leaving thousands of vacationers stranded.

Asian Shares Mixed

The major Asian stock indexes posted mixed results on Monday as investors expressed concerns over the prolonged U.S.-China trade dispute with high-level trade talks set to begin in early October. Most major investors expect some progress toward a deal, but are not expecting to see an end to the trade dispute anytime soon.

“The starting point is they’re not on the same page, the collateral damage is going to be far more pernicious because even if China is implicated it’s not just China that’s implicated,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, told CNBC’s “Squawk Box” on Monday. “I don’t think anyone is winning the trade war.”

On Monday, Japan’s Nikkei 225 Index settled at 22079.09, up 34.64 or +0.16%. Hong Kong’s Hang Seng Index closed at 26222.40, down 213.27 or -0.81% and in South Korea, the KOSPI Index finished at 2091.70, up 0.18 or +0.01%.

China’s Shanghai Index settled at 2977.08, down 29.37 or -0.98% and Australia’s S&P/ASX 200 closed at 6749.70, up 18.90 or +0.28%.

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