Global Stocks Fluctuate as European Data Beats Forecasts
August 22 2019 - 6:10AM
Dow Jones News
By Caitlin Ostroff
-- U.S. futures lower
-- Eurozone PMI slightly beat forecasts
-- Jackson Hole symposium to start
Global stocks were treading water after economic data for Europe
came in above expectations, ahead of minutes from the European
Central Bank that will provide hints about its stimulus plans.
The Stoxx Europe 600 fell 0.3% after data on preliminary
purchasing managers indexes -- a measure of activity in the
manufacturing and services sectors -- for Germany and France posted
small rises, beat forecasts.
The German DAX slipped 0.2%, while the French CAC 40 fell
0.3%.
In the U.S., futures for the S&P 500 and Dow Jones
Industrial Average fell 0.3%. The contracts don't necessarily
predict moves after the opening bell.
Although the German data were better than expected, Florian
Hense, an economist for Berenberg Bank, said he remained concerned
about a potential recession amid threats to German exports from the
Trump administration's talk of tariffs on European car
manufacturers.
"The numbers today neither discredit that nor really confirm
it," he said. "What it confirms is that the domestic side of the
economy is still holding up pretty well."
Germany's manufacturing figures were still at their
second-lowest since June 2013, according to Melanie Debono, a
European economist for Capital Economics, in a note.
Based on its historical relationship with economic growth, Ms.
Debono said, the German PMI suggested that after contracting in the
second quarter, the economy may have entered a technical recession
in the third quarter. While the services sector appeared to be
holding up well, the manufacturing recession was dragging on.
"All in all, the surveys suggest that growth in the
single-currency area has remained lackluster and support the case
for further policy easing," she said.
The ECB will publish minutes from its July meeting later
Thursday, which will be scrutinized by investors for new policy
measures.
The German 10-year bund was yielding minus 0.664%, slightly up
from Wednesday afternoon's minus 0.677%. Bond yields and prices
move in opposite directions.
Asian stocks were mixed, with the Shanghai Composite up 0.1%,
Hong Kong's Hang Seng down 0.8% and Japan's Nikkei 225 up 0.1%.
In currencies, the Chinese yuan slipped against the U.S. dollar
on Thursday, to its lowest levels since 2008. One U.S. dollar
recently bought 7.0853 onshore yuan, compared with 7.0942 in the
offshore market.
The 10-year Treasury yield edged down to 1.574% on Thursday,
from 1.577% on Wednesday, while the 2-year Treasury yield slipped
to 1.559% compared with 1.569%. Investors closely watch the gap
between the two yields, as recessions have often followed when the
yield on the longer-term note has higher than that of the
shorter-term bond, as it did briefly last week.
Thursday also marks the first day of the Jackson Hole symposium,
where central bank leaders from across the globe will meet to
discuss issues facing world economies. Amid recent data pointing to
a slowdown, analysts will be watching for cues on central bank
policy moving forward.
Data to be released near the start of that meeting include
initial U.S. jobless claims and U.S. preliminary manufacturing
figures.
Minutes released Wednesday from the central bank's latest
meeting showed Fed officials saw their move to cut interest rates
last month as a "recalibration," rather than the start of a more
aggressive easing cycle.
In commodities, global benchmark Brent crude oil gained 0.4% to
$60.54 a barrel. Gold prices slipped 0.5%.
(END) Dow Jones Newswires
August 22, 2019 05:55 ET (09:55 GMT)
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