European stocks sag on mixed economic data
European stock markets sagged Thursday, as Britain ended a pandemic jobs support scheme and German investors digested disappointing economic data along with post-election uncertainty.
After advancing timidly in the morning, London equities closed 0.3 percent lower as Britain marked the end of its furlough programme and investors shrugged off news that the economy rebounded more than expected in the second quarter.
Frankfurt and Paris also slid back, losing 0.7 percent and 0.6 percent respectively at the close.
On Wall Street, the Dow Jones Industrial Average opened higher, but quickly turned back into the red. The S&P 500 and the tech-heavy Nasdaq were also in negative territory.
“It’s been a strange week so far and that may be feeding into the lack of direction we are seeing across equity markets today,” noted Oanda analyst Craig Erlam.
Oil prices were higher on supply concerns and the dollar steadied after soaring the previous day on hopes of tighter US monetary policy.
Investors remain worried about soaring inflation, the debt crisis at Chinese real estate developer Evergrande and the ongoing global supply crunch.
UK car production slumped 27 percent in August from a year earlier, in part due to tight supplies of semiconductors, industry data showed.
The severity of the supply issue was exemplified by carmaker Opel’s announcement Thursday that it will close one of its plants until early 2022 owing to the global microchip shortage that has held back production.
German sentiment remains dogged by fears that talks to form a government will prove long and protracted after Chancellor Angela Merkel’s conservatives lost to the Social Democrats.
– US political fight –
Traders were also watching the political haggling in the United States.
The Senate was expected to approve later Thursday a stopgap measure to fund the government and avert a shutdown.
But Congress is also mired in a battle over raising the debt ceiling.
Republicans have blocked Democrat moves to lift the borrowing limit and Treasury Secretary Janet Yellen has warned the US government will run out of cash to meet its obligations on October 18, so the race is on to avert what many say could be a catastrophic default.
Observers say that while the row is merely political brinkmanship, the fact that the deadline is so close is making waves on trading floors.
In Asia, sentiment was dampened by news that China’s factory activity contracted in September for the first time since February 2020 as the country faces an energy crunch that sparked power outages.
– Key figures around 1600 GMT –
New York – Dow: UP DOWN 0.9 percent at 34,071.48 points
London – FTSE 100: DOWN 0.3 percent at 7,086.42 (close)
Frankfurt – DAX: DOWN 0.7 percent at 15,260.69 (close)
Paris – CAC 40: DOWN 0.6 percent at 6,520.01 (close)
EURO STOXX 50: DOWN 0.8 percent at 4,048.08
Tokyo – Nikkei 225: DOWN 0.3 percent at 29,452.66 (close)
Hong Kong – Hang Seng Index: DOWN 0.4 percent at 24,575.64 (close)
Shanghai – Composite: UP 0.9 percent at 3,568.17 (close)
Euro/dollar: DOWN at $1.1573 from $1.1598 at 2100 GMT on Wednesday
Pound/dollar: UP at $1.3461 from $1.3427
Euro/pound: DOWN at 85.96 pence from 86.38 pence
Dollar/yen: DOWN at 111.50 yen from 111.96 yen
Brent North Sea crude: DOWN 0.1 percent at $78.57 per barrel
West Texas Intermediate: UP 0.6 percent at $75.33 per barrel