Europe close: Stocks retreat on weak data from around the world
Stocks finished lower, tracking losses on Wall Street and in China, amid a rash of poor economic news from around the world and on the back of a weak reading on monthly US non-farm payrolls.
Capturing the mood in markets, Michael Hewson, chief market analyst at CMC Markets UK, said: "The recent rally in European markets appears to have finally run out of steam this week as investors start to take profits over concerns that the macro economic backdrop is much weaker than was thought to be the case, and that whatever the outcome of a US, China trade deal, it won’t be enough to mitigate a broader economic slowdown, with this week’s OECD downgrades also sharpening investor concerns."
To take note of, in a report entitled "Europe=Japan is correct and consensus", strategists at Bank of America-Merrill Lynch said the latest week had seen $10.1bn come out of global equities, marking the worst start to the year for equity flows since 2008.
By the end of trading, the Stoxx 600 was down by 0.89% to 370.57, alongside a 0.52% fall for the German Dax to 11,457.84 and a decline of 1.70% to 5,231.22 for the Cac-40.
Euro/dollar meanwhile was 0.55% higher following an unexpectedly weak reading on the February US jobs report and trading at 1.12422.
US non-farm payrolls grew by just 125,000 during the previous month, following January's bumper increase of 304,000, although economists were confident that they would recover in March.
Also unnerving traders, overnight China's National Bureau of Statistics reported that exports fell at an outsized pace of 20.7% year-on-year in February (consensus: 1.4%), after growth of 9.1% during the previous month.
The news contributed to a 4.4% drop in the Shanghai Stock Exchange's Composite Index, alongside a 10% fall in shares of stockmarket darling People’s Insurance Company of China after the country's biggest broker said the stock might halve in value over the coming year.
Some took the downgrade as a signal that authorities wanted to rein back the stockmarket.
Import growth was also weaker-than-expected, printing at -5.2% (consensus: 0.5%), versus a reading of -1.5% in the month before.
On the Continent meanwhile, according to Germany's Federal Office of Statistics, in January factory orders plummeted by 2.6% month-on-month (consensus: 0.3%).
A very large upwards revision, worth 2.5 percentage points to 0.9%, to the prior month's print, acted as an offset, but not entirely.
According to the economists at Barclays Research, the data suggest that "weak manufacturing momentum will likely persist in Q1 19 as business confidence is struggling to rebound due to weak external backdrop."
In corporate news meanwhile, the spotlight was on Deutsche Bank and Commerzbank after Bloomberg reported that talks around a potential tie-up had intensified - although they reportedly remained informal - after the German government brought pressure to bear on the two lenders.