The Breakfast Briefing: U.S. & Global Stocks Absorb Blow Of Manufacturing Slowdown

Ted

FYI: U.S. stock index futures were deep in the red on Wednesday morning.

Around 5:30 a.m. ET, Dow futures indicated a negative open of nearly 200 points. Futures on the S&P 500 and Nasdaq were also sharply lower.

• European and Asian stocks lower

• Industrial stocks lead the drop

• Investors await ADP Jobs data

Global stocks fell Wednesday, led by drops in banks and industrial companies as investors expressed increasing worries of a global economic slowdown.

The Stoxx Europe 600 opened down 0.9%, with Germany’s DAX 1% lower and the U.K.’s FTSE 100 down 1.2%.

Markets continued to react to disappointing economic data published Tuesday—showing manufacturing activity was at its lowest point in a decade in the U.S. The figures came on top of recent downbeat data from the European Union, China and Japan.

Steel giant ArcelorMittal and Finnish construction machinery maker Konecranes were both among the biggest losers in Europe, falling 2.5% and 3% respectively.

If the manufacturing slowdown spreads to the still robust service sector, this would increase pressure on the U.S. Federal Reserve to cut rates again in October, said Stefan Schilbe, HSBC Germany’s chief economist, in a note.

Bank stocks in Europe fell Wednesday, with the Euro Stoxx Banks index down 1.0%, reflecting unease about falling bond yields, which tend to crimp lender profits. Banks’ performance is also seen as highly correlated with economic growth. Swiss banks UBS Group and Credit Suisse Group were both down more than 1.5%.

Among individual stocks, shares in U.K. bookmaking business Flutter Entertainment rose 14% after it agreed to merge with Stars Group, creating an online betting giant worth more than $11 billion. Shares in supermarket chain Tesco were up 1.3% after it said profit rose in the first half of fiscal 2020. It also announced Chief Executive Dave Lewis would step down next summer.

In Asia, Korea’s Kospi traded nearly 2% lower following news that North Korea fired at least one missile off its east coast. The move, seen as a show of strength, came after Pyongyang said it would resume official nuclear talks with the U.S. In Japan, the Nikkei fell 0.5% and Hong Kong’s Hang Seng was down 0.2%. Mainland Chinese stock markets were closed for a holiday.

In commodities, oil futures for Brent crude rose 0.2% to $58. 97 a barrel.

The yield on U.S. 10-year Treasurys edged higher to 1.645%, from 1.638% Monday. Bond yields and prices move in opposite directions.

Looking ahead, investors were eyeing the U.S. ADP National Employment Report for signs of any cracks in the job market. Ford Motor Co. reports third-quarter sales
Regards,
Ted

WSJ:
https://www.wsj.com/articles/global-stocks-fall-amid-rising-fears-of-economic-slowdown-11570004904

Bloomberg:
https://www.bloomberg.com/news/articles/2019-10-01/stocks-in-asia-to-slide-as-u-s-data-disappoints-markets-wrap

IBD:
https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-apple-stock-strong-stock-market-rally-fragile-jpmorgan-stock-proofpoint-tesla-deliveries/

CNBC::
https://www.cnbc.com/2019/10/02/dow-futures-trump-trade-manufacturing-data-wall-street.html

U.K.
https://uk.reuters.com/article/uk-britain-stocks/ftse-100-slides-amid-brexit-angst-growth-worries-idUKKBN1WH0M9

Europe:
https://www.reuters.com/article/europe-stocks/update-1-european-shares-hit-one-month-low-as-growth-worries-intensify-idUSL3N26N1KD

Asia:
https://www.marketwatch.com/story/asian-markets-fall-as-fears-of-global-slowdown-pick-up-2019-10-01/print

Bonds:
https://www.cnbc.com/2019/10/02/us-treasury-yields-rise-indicating-tentative-rebound-in-sentiment.html

Currencies:
https://www.cnbc.com/2019/10/02/forex-markets-us-manufacturing-in-focus.html

Oil:
https://www.cnbc.com/2019/10/01/oil-markets-us-oil-output-opec-in-focus.html

Gold:
https://www.cnbc.com/2019/10/02/gold-markets-us-manufacturing-data-in-focus.html

Cuirrent Futures:
https://finviz.com/futures.ashx