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Global Markets Fall, EU Manufacturing Recession Deepens, Trade Talks Productive But Yield No Results

Global markets falter as trade, geopolitics, and economic data weigh on sentiment. But the news isn’t all bad.
Thomas Hughes
Price crash and bear market

The U.S. Markets Are Indicated Lower On Monday

The U.S. indices are indicated to open lower on Monday. Investor sentiment is souring due to lack of progress with trade negotiations and weak economic data from the EU. In trade news, both the U.S. and China said last week’s talks were productive and yet no progress was made. In addition, China’s planned trip to American farmland was called off furthering the appearance of discord among negotiators. At this time no deal is expected before the U.S. election. The Dow Jones is in the lead with a loss near -0.10% while the S&P 500 is down about -0.05% and the NASDAQ Composite is up 0.05%.

In economic news, the Chicago Fed’s National Activity Index shows conditions rebound in August. All four of the index’s sub-components improved from the last month although three of them are still negative. The headline reading is 0.10, up from -0.41 last month, and the three-month average improved to -0.05. The flash reading of Markit PMI is due out later today.

In stock news, shares of Facebook are under pressure as the Congressional probe into antitrust violations deepens. Congress members are now talking to CEOs and employees of Facebook’s partners about the company’s strong-arm tactics. In other news, Tesla faces a lawsuit over CEO Elon Musk’s pay package.

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European Markets Fall Hard On German Data

The European markets are down across the board after weaker than expected German PMI data. Markit’s composite PMI fell below 50 and into contractionary territory as the manufacturing recession deepens. The manufacturing PMI fell to 41.4 and the lowest level in over ten years. The German DAX led today’s rout with a loss of -1.10% while the CAC fell -1.05% and FTSE fell a less severe -0.40%.

In stock news, Thomas Cook is the talk of the day. The ailing travel and leisure company says it can’t get emergency financing and must close its doors. The news comes as a shock to thousands of employees and travelers now stuck on vacation. The upshot is the company’s failure alleviates overcapacity in the industry and will boost results for others in the business.

Asia Mixed, Trade Talks In Focus

Asian markets were mixed although China showed some trade-related weakness. The Shanghai Composite and Hong Kong Hang Seng both shed nearly -1.0% while the ASX and Kospi both closed with small gains. Japan’s markets are closed today for a holiday. Shares of travel giant Fosun are the biggest mover in today’s market, down about -4.0%, because it is the largest shareholder in now-defunct Thomas Cook. In other news, oil prices are on the rise again due to news the Saudi’s will not be able to repair its oil facility as quickly as first thought. The new estimates are now “months” longer than first estimated.

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