Europe midday: Stocks dip into the red ahead of US data

3rd Sep 2024 15:26

(Sharecast News) - European stocks had dipped into the red by midday on Tuesday as investors eyed a raft of US data later in the day and the week.

Traders were bracing for data including the purchasing managers' index, factory orders, jobless claims, nonfarm payrolls and the unemployment figures.

Naeem Aslam, chief investment officer at Zaye Capital Markets, said: "Speculators continue to believe that the risk of the US economy falling into recession is still very much on the table, and in this context, every single economic reading is highly important for them. For example, today's US ISM Manufacturing PMI number is going to be highly important for traders and investors because they will continue to look at things from the contraction territory.

"The forecast for today's number is 47.5; any number below the reading of 50 confirms that the sector is not in the expansion territory but in the contraction territory- and this very much lines up with the narrative that the US economy is actually open to threats of another recession taking place. On the positive side, we anticipate a slightly improved number compared to the previous 46.8.

"Now, if the actual number matches the expectations or comes slightly better than the expectations, it will not rock the boat for many, as many would think that we are only meeting expectations and there is nothing to be excited about as the headline number still confirms contraction. The fireworks will occur if the number falls short of the forecast or if it exceeds the desired level, specifically a reading of 50 or above."

In the UK, retail sales were higher than last year in August despite already strong comparatives in 2023, though growth was relatively subdued amid a "challenging" environment that's likely to last until the end of the year, according to a closely watched retail barometer released earlier.

The British Retail Consortium-KPMG Retail Sales Monitor for August showed a 1% year-on-year increase in UK retail sales, against an increase of 4.1% in August 2023.

This was above the three-month average growth rate of 0.4%, but slightly below the 12-month average of +1.2%.

In equity news, shares in Rolls-Royce jumped after a sharp fall on Monday in response to news that Cathay Pacific flight CX383, powered by Rolls's XWB-97 engines, had a problem and had to be grounded.

The airline then cancelled 24 return flights as it started to inspect its fleet of Airbus A350s, powered by Rolls-Royce engines.

But Cathay said on Tuesday that three of the 48 Rolls-Royce-powered planes it had inspected had been successfully repaired and all of the jets were set resume operation by Saturday.

Elsewhere, Partners Group tumbled as the Swiss private equity firm's first-half numbers missed expectations.