StockBeat: Markets Mixed as PMIs Fail to Lift Mood

August 23
03:04 2019

By Geoffrey Smith — Europe’s stock markets were broadly mixed after early trading on Thursday, with stronger-than-expected business surveys in the eurozone’s two biggest economies failing to generate any noticeable feelgood factor.

‘Flash’ readings of IHS Markit’s purchasing managers’ indexes for France and Germany all beat expectations, both in manufacturing and services, and suggested that the euro zone will avoid a recession despite signs that Germany, its largest single economy, is headed for one.

By 5 AM ET, the benchmark STOXX 600 was down 0.3%, while the German DAX was down 0.2%. The U.K. FTSE 100, buffeted all week by political noise about an increasingly likely ‘No-Deal Brexit’ was down 0.6%.

Italy’s FTSE MIB led the way for a second straight day, rising 0.5% on hopes that snap elections can be avoided. The country’s president is due to sound out the center-left Democratic Party later Thursday about its willingness to govern together with 5 Stars, something that has seemed highly unlikely until this week.

“The rebound in the Euro-area PMIs was mildly positive news, but the details remain worrying,” said Nordea Markets’ strategist Jan von Gerich “The euro-area economy is too weak to generate meaningful inflation pressures, which means the ECB needs to do more,” he said. He added that the forward-looking components of the services PMI had also fallen, suggesting that the one sector that has propped up the economy so far this year is now also faltering.

Markets were generally in holding mode, awaiting the start of the U.S. Federal Reserve’s conference in Jackson Hole, where Chairman Jerome Powell will take center stage on Friday.

Among the notable gainers were NMC Health (LON:NMC), a London-listed healthcare group focused on the Middle East, which rose as much as 42% after an unconfirmed Reuters report that two competing interests want to buy up to 40% of the company from its largest shareholders at a substantial premium. The shares retraced later but were still up 26% on the day, after the company reported quarterly figures in line with consensus.

Elsewhere in the health space, medical device maker Ambu (CSE:AMBUb) slumped nearly 20% after warning again on profits.

In energy, Royal Dutch Shell (LON:RDSa) continued took another baby step into the world of electricity supply, paying $ 418 million for ERM, an Australian supplier of power to business consumers. ERM’s two gas-fired power stations provide a natural downstream hedge for the gas that Shell produces in the region.

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