Europe markets slide on dismal economic data

European stock markets fell yesterday 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.
London’s FTSE 100 was down 0.3% to 7,326.08 points, Frankfurt’s DAX 30 lost 1% to 12,300 and Paris’s CAC 40 dived 1.1% at 5,630.76 close yesterday 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.
The euro also slid lower.
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% and easyJet 4.5%, but British Airways parent IAG shed 1.3%.
In Hong Kong, China’s Fosun International lost 1.5% after the collapse of Thomas Cook, in which it is the top shareholder.
The price of oil rose after Iran warned the presence of US forces in the Gulf was causing instability in the region.
Meanwhile the pound sank 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 on 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.
“I’m not looking for a partial deal. I’m looking for a complete deal,” Trump told reporters at the White House.
He added that he did not see the need for an agreement before the 2020 presidential election.
The remarks tempered recent optimism on the talks and the possibility of a quick piecemeal deal, though they came as China hailed progress in preparatory discussions ahead of a planned high-level meeting next month.
“The hot and then cold and then hot and cold again US-China trade vibes continue to rattle markets,” said Rodrigo Catril at National Australia Bank.
US stocks were largely flat in late morning trading.
Sterling was steady yesterday as investors looked for signs of progress in Britain’s Brexit talks and awaited a Supreme Court ruling on whether Prime Minister Boris Johnson misled Queen Elizabeth over his reasons for suspending parliament this month.
Johnson meets European Union leaders at the UN General Assembly in New York. Expectations for progress were low, and the substantial volume of short positions built up on Sterling may shield the currency from any sharp declines, analysts said.
“We are sceptical of much in the way of progress being made, and on top of that there is also the risk of PM Johnson having to cut his trip short to return to London if the Supreme Court decision goes against the government,” MUFG analysts said in a note to clients.
Johnson suspended parliament for five weeks, until October 14, a move critics saw as an attempt to stop MPs from preventing Britain leaving the EU on October 31. Scotland’s highest court of appeal ruled the suspension unlawful, but Johnson appealed.
By 1445 GMT, the pound was down 0.3% at $1.2430, having dropped earlier to a six-day low of $1.2413, mostly because of dollar strength after a solid composite purchasing managers’ survey.
The dollar index was up 0.2% at 98.68 after rising earlier to a week-and-a-half high of 98.832.