European equities waver on economic gloom

LONDON: European stock markets wavered on Wednesday on news that the eurozone and UK economies shrank in November, but by less than the prior month.

In midday deals, Frankfurt equities fell 0.2 percent and Paris flatlined, while London won 0.3 percent.

Oil prices slid on fears of more painful Covid lockdowns in China that could ravage the Asian giant’s energy demand. The euro steadied against the dollar and yen.

The eurozone’s composite purchasing managers index (PMI), a key economic indicator, improved from 47.3 in October to 47.8 in November, S&P Global said.

However, activity languished under 50 — signifying the fifth consecutive month of economic contraction as inflation spikes.

“The latest macroeconomic data from Europe continues to paint a grim picture,” said City Index analyst Fawad Razaqzada.

“Flash manufacturing and services PMIs for France and Germany, and eurozone as a whole, remain in contraction territory.

“Although the PMI data still managed to beat expectations, that’s only because we are seeing improvement from a very low base.”

Britain’s composite PMI was also fractionally higher, from 48.2 to 48.3 in November, but that marked the fourth straight contraction.

The news comes after the UK government recently confirmed that the nation’s economy was in recession, with inflation sitting at a 41-year high.

The reading is “consistent with our view that the (British) economy is probably already in recession”, noted Capital Economics analyst Ashley Webb.

Elsewhere, Asian stocks rose on hopes that the Federal Reserve will carry out smaller US rate hikes at its next few meetings after inflation cooled in the world’s biggest economy.

But there is growing concern that a surge in China’s Covid-19 cases will see officials impose more economically-damaging restrictions.

Wall Street on Tuesday enjoyed a timely rally thanks to healthy retailer earnings amid signs US consumers — the economy’s key driver — remain resilient to higher borrowing costs and inflation.

Minutes from the Fed’s policy meeting this month will be pored over when they are released Wednesday, with traders hoping for some insight into the bank’s thinking on rates.

However, US trading volumes are likely to be muted ahead of Thanksgiving on Thursday.

Traders were also keeping tabs on protests at the world’s largest iPhone factory as Foxconn workers grow increasingly angry at long-running Covid curbs.