Weak PMIS Unwind Stress Test Gains

Weak PMIS Unwind Stress Test Gains

CMC Markets  | Aug 01, 2016 11:57

Relief that European banks mostly survived the ECB’s stress test helped European markets get off to a good start on Monday but gains started to drift away mid-morning following disappointing UK and European PMI data.

UK manufacturing activity has slumped to its lowest level since February 2013. The drop in sterling has helped boost export orders but this was more than offset by a weaker production and domestic orders. The reading of 48.2 was worse than the flash estimate of 49.1. It appears post-Brexit fears amongst manufactures were not just a flash in the pan.

European manufacturing has also slowed following the Brexit vote with PMIs from Spain and Italy showing a marked slowdown whilst France remains stuck in contraction. Worryingly, two-speed Europe is emerging again with most of the gains in output and employment coming from Germany.

Shares of Heineken (LON:0NBD) dipped over 2% after a rise in first-half profits and revenues came short of analyst expectations. Heineken’s global diversity is helping it whether various economic storms around the world with a focus on regions that are growing. Gains in the likes of Vietnam and Mexico have outstripped declines in Africa and Eastern Europe including Russia. The generally strong first half performance reduces the need for Heineken to merge with a rival such as Carlsberg (CO:CARLa) or Diageo (LON:DGE) to fend off mega-brew competitor Anheuser-Busch Inbev SA (LON:0O1Z)/SABMiller PLC (LON:SAB), should the deal eventually happen.

Shares of BA-owner IAG (LON:ICAG) fell nearly 3% after it emerged Qatar Airways has upped its stake to over 20%.

US stocks look set to open higher on Monday ahead ISM manufacturing data and earnings from retailer Lowe’s (NYSE:LOW).

USA pre-opening levels

S&P 500: 2 points higher at 2,075

Dow Jones: 28 points higher at 18,460

Nasdaq 100: 6 points higher at 4,736

DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.

No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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CMC Markets

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