Europe midday: Shares still lower after EZ manufacturing PMIs
By Frank Prenesti
Date: Tuesday 06 Dec 2022
(Sharecast News) - European shares opened lower on Tuesday as strong services data in the US suggested that policymakers may have to maintain an aggressive stance on interest rates.
The pan-regional Stoxx 600 index was down 0.34% at 1155 GMT. Sentiment was also hit by S&P Global's Eurozone construction purchasing managers index, which fell to 43.6 in November, down from 44.9 in October for a seventh consecutive monthly contraction across the sector.
November's decline was the sharpest since May 2020, with France leading the downturn at 40.7, followed by Germany at 41.5 - which had recorded the worst downward trend in September and October.
In other economic news, German factory orders rose more than expected in October, according to figures released by Destatis.
Orders were up 0.8% on the month following a revised 2.9% decline in September, coming in comfortably ahead of expectations for a 0.1% increase.
"Worries that the Fed could unwrap an unwelcome present of another super-sized rate hike when policymakers meet next week are sprinkling Christmas fear on indices. Wall Street registered its worst day in almost a month after a snapshot from the services industry showed consumer resilience was strong," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
"This has fuelled speculation that the US central bank will have to be more Scrooge-like and make borrowing even more expensive to rein in inflation. Companies still appear to be dealing with pent-up demand with the ISM reading showing the services sector is expanding merrily.
"With central bank policies so far having meagre impact on the jobs market, the chances of a 0.75% rate hike being announced on the 14th are now considered to be higher. The potential effect of another rapid tightening round has led to jitters about repercussions for the global economy."
In equity news, rental equipment firm Ashtead gained after it said that full-year results were set to be ahead of its previous expectations.
SSP Group gained as the travel food outlet operator swung to a profit on the back of a rebound from the Covid pandemic.
Aeroports de Paris slumped after Royal Schiphol Group said it was selling its remaining stake in the operator or Orly and Charles de Gaulle.
Phoenix Group was up as the UK life insurer set a target to generate around £1.5bn in long-term cash from new business by 2025, as it looks to build on growing demand for corporate pensions insurance deals.
Orsted gained after the renewable energy firm said it planned to invest in a large-scale green hydrogen facility in Denmark.
Reporting by Frank Prenesti for Sharecast.com
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