Europe open: Stocks drop on recession fears; manufacturing data eyed
European stocks fell in early trade on Thursday as recession fears continued to rattle markets, and as investors looked ahead to the latest reading on eurozone manufacturing.
At 0835 BST, the benchmark Stoxx Europe 600 index and Germany’s DAX were both down 1%, while France’s CAC 40 was 1.3% lower.
Richard Hunter, head of markets at Interactive Investor, said: "Markets remain unable to snap their recent losing streak, with investors still positioning for tougher times ahead.
"Central to current concerns are recessionary fears in the US and a beleaguered China. With the world’s two largest economies – and growth engines – under pressure, the immediate outlook is poor, with markets yet to find an equilibrium, suggesting that further declines could follow in the absence of more positive developments."
Investors were digesting the latest data out of China, which showed that factory activity shrank in August as power cuts and Covid-19 curbs impacted production.
The Caixin manufacturing purchasing managers’ index fell to 49.5 from 50.4 in July. This was below consensus expectations of 50.0, which is the level that separates contraction from expansion.
Pantheon Macroeconomics said the weaker-than-expected PMI reading, particularly after the upside surprise from the official survey, suggests China’s private sector is under more pressure than its state-backed counterpart, given the differences in survey samples.
Closer to home, the eurozone S&P Global manufacturing PMI for August is due at 0900 BST.
In corporate news, consumer goods giant Reckitt Benckiser slid as it said chief executive officer Laxman Narasimhan will step down at the end of September.
Elsewhere, Pernod Ricard lost ground despite posting better-than-expected first-quarter results.