By Dave Morris
European markets shuddered Friday, led by losses for oil and banks, as the latest Eurozone purchasing managers index figures signaled a broad-based slowdown.
How are markets performing?
The board was a sea of red Friday, with the STOXX Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.27% ending 1.2% lower at 376.03, after closing relatively flat Thursday.
In the U.K., the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.43% slid 2% to finish at 7,207.59 on Friday, reversing Thursday's gain of near 0.9%.
German and French bourses were also suffering. Germany’s DAX /zigman2/quotes/210223310/composite DAX +0.53% fell 1.6% to end at 11,364.17, adding to the decline at Thursday’s close of 0.46%. France’s CAC /zigman2/quotes/210597958/delayed FR:PX1 +0.21% fell 2% to 5,269.92 after closing basically flat Thursday.
What’s moving the markets?
The flash PMI figures for the eurozone in March came in below expectations, and the individual number for Germany and France revealing. The preliminary Markit PMI Composite figure, seasonally adjusted, was 51.3, below both analysts’ predictions of 52 and the February figure of 51.9.
Germany’s manufacturing woes continued, with its preliminary Markit Manufacturing PMI contracting to 44.7, the worst level in six-and-a-half years as its auto industry faced a cornucopia of threats from emissions regulations to Brexit. France’s preliminary Markit PMI Composite figure of 48.7 saw its economy slipping into contraction (a PMI reading of below 50 indicates shrinkage) after squeaking by in February with 50.4.
While stocks and the euro fell, the yield for the 10-year German government bond /zigman2/quotes/211347112/realtime BX:TMBMKDE-10Y +9.12% , or bund, was in negative territory, its lowest in nearly 2 1/2 years.
“Today’s PMIs provide retrospective justification of the ECB’s easing moves at its most recent meeting (see here) with a return to trend growth in H1 of this year looking difficult given the weakness of the external sector,” said Cathal Kennedy, European economist at RBC Europe, in a note to clients.
“That will in turn make it more difficult to stem the weakening of price pressures in the euro area which the PMI surveys continue to flag,” said Kennedy.
At a pivotal European Council summit where meetings overran dramatically, the European Union offered the U.K. a two-pronged plan to extend Brexit beyond the March 29 deadline. The U.K. will be offered a delay until May 22, if MPs approve the deal Prime Minister Theresa May had negotiated. If not, the EU will support a shorter delay, to April 12 to formulate a new plan.
But with PMIs dominating, drivers such as Brexit had little impact. At the open, prices for the most part were roughly where they were when the week began — the difference between Monday’s open and Thursday’s close on the STOXX 600 was a mere 0.14% rise, leaving the field clear for growth worries to stomp all over markets’ formerly placid surface.
Which stocks are active?
Declining equities were broad based rather than confined to a few names, but banks and energy companies were among the biggest losers. HSBC Holdings PLC /zigman2/quotes/203901799/delayed UK:HSBA +0.95% /zigman2/quotes/208272822/composite HSBC -0.71% /zigman2/quotes/208272822/composite HSBC -0.71% fell 2.7% and Total SA /zigman2/quotes/206172043/delayed FR:FP -0.05% /zigman2/quotes/201824152/composite TOT -0.09% dropped 1.7%.
Shares taking hits Friday include well known names such as Finnish telecommunications hardware provider Nokia Oyj /zigman2/quotes/203672305/delayed FI:NOKIA +0.16% sinking 5.1%, German lighting manufacturer OSRAM Licht AG /zigman2/quotes/205623891/delayed DE:OSR +0.10% down 3.8% and French alcohol producer Rémy Cointreau SA /zigman2/quotes/206802273/delayed FR:RCO +0.24% , down 3%.
British mobile power generation company Aggreko PLC /zigman2/quotes/210267838/delayed UK:AGK +0.06% led the gainers after issuing its annual report, confirming figures after its preliminary full year results showed it beating its own guidance. It rose 3.5%.