The FTSE 100 (^FTSE) and European stocks were lower on Wednesday morning even as the UK manufacturing sector hailed its strongest growth in two years, according to data company S&P Global.
The manufacturing index rose to 51.8 for July, up from 50.9 in June. A reading below the 50 mark on the index indicates a drop in activity, but above 50 indicates growth.
It came as Germany’s manufacturing woes deepened. The manufacturing purchasing managers’ index (PMI) dropped from 45.1 points to 42.2, a nine-month low.
The German services sector still reported an expansion in output, at 52 points, but the manufacturing weakness drove the composite reading down below 50.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: “The hope that this sector could benefit from a better global economic climate is vanishing into thin air.
“While it is still early days and many data points are yet to come, the second half of the year is starting on a very weak note.”
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London’s benchmark index was 0.2% lower but precious metal miners rebounded as gold prices steadied
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Germany’s DAX (^GDAXI) dipped 0.7% and the CAC (^FCHI) in Paris headed 0.9% into the red
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The pan-European STOXX 600 (^STOXX) was down 0.4%
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Wall Street is set to open lower as S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all negative territory
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The pound was flat against the US dollar (GBPUSD=X) at 1.2909
“European markets slid lower on Wednesday as risk appetite dropped following a disappointing start of the earning season in Europe and the US,” said Pierre Veyret, technical analyst at ActivTrades.
“Investors were disillusioned with the first slew of corporate results from the US tech sector after Alphabet and Tesla published results falling short of expectations.”
“Traders also face the same situation in Europe, but with the luxury sector this time, after LVMH showed a significant decrease in sales due to uncertain global economic conditions as well as a drop in Chinese Demand.
“But so far, these disappointing results have only provided investors more reasons to take some profits out, naturally leading to corrective moves across many benchmarks.”
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