Europe in CRISIS: European stocks in the RED as factory activity weakens

Eurozone manufacturing activity was revealed to have barely expanded at the end of 2018, providing disappointing reading for European Central Bank policymakers. Manufacturing PMI fell from 51.8 to 51.4 in November, in line with the flash estimate. Earlier PMI surveys showed Italy remained in contraction territory and was joined by France, where data showed a first deterioration in operating conditions for 27 months. Manufacturing growth in both Germany and Spain was modest, easing to the weakest in around two-and-a-half years.

But it was a more positive note for British factories, where stockpiling had been recorded as the nation braces for possible border delays when Brexit happens in less than 100 days.

Irene Cheung, Asia strategist at ANZ, said: “We are really seeing a global slowdown into this year, and in Asia, particularly, export-oriented countries are hurting.

“Our expectation for central banks is that most of them won’t change policy in 2019 and these numbers coming out on the weak side won’t change that outlook.”

European shares were dented today, with markets still in negative territory after lunchtime today.

As of 14:30 GMT, the FTSE 100 was down 0.81 percent, or 54 points.

While in Germany, the DAX fell by 0.68 percent, down 71 points, and the Spanish IBEX 35 had lost 0.96 percent, or 82 points.

Markets were also lower across Asia as world shares started 2019 on a downbeat trend off the back of negative factory data.

At the same time, the euro was down $1.1374 to the US dollar and up to 0.9022 pence versus the pound.

In China, the Caixin/IHS Markit PMI slipped into contraction territory for the first time in 19 months, broadly tracking an official survey released on Monday.

China’s weakness spilled over to other Asian economies.

Malaysian manufacturing slowed to its weakest pace of expansion since the survey began in 2012, and Taiwan fell to its lowest since September 2015.

Meanwhile, official economic data out of Singapore showed its gross domestic product grew more slowly than forecast in the fourth quarter as the city-state’s manufacturing contracted on a quarterly basis.

With growth slowing and inflation below or barely within target in most countries, Asian central banks are unlikely to continue their tightening cycle this year, barring any shocks in currency markets.

The United States and China agreed at the start of December to a 90-day truce following tit-for-tat tariffs that have disrupted the flow of hundreds of billions of dollars of goods between the two countries.

China’s economic growth slowed to 6.5 percent in the third quarter of last year, the weakest since the global financial crisis.

Tim Graf, chief macro strategist at State Street Global Advisors, said: “It’s a continuation of the worries over growth.

“You can see them in the Asian numbers, which all confirm that we have passed peak growth levels.”

source: express.co.uk