Business World

Monday 24 October 2016

Markets struggle as oil, data depresses stocks

Published 02/06/2016 | 02:30

The London Stock Exchange (LSE). Photo: PA
The London Stock Exchange (LSE). Photo: PA

Global equity markets started the new month on the back foot yesterday, undermined by lacklustre economic data and an oil price slide that took the edge off energy and mining shares.

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The pan-European FTSEurofirst 300 and the STOXX Europe 600 both fell more than 1pc by lunchtime, led by the resources sector.

US equity futures pointed to a weak opening for Wall Street later in the day.

The catalyst for the moves lower was Chinese manufacturing data that showed the economy still struggling to regain traction, while Eurozone factory growth languished at a three-month low.

Oil slid more than 1pc too, hurting resources stocks and risk appetite in general. The MSCI world index, which tracks shares in 45 countries, shed 0.2pc, pulling away from a one-month high hit earlier this week.

Markus Huber, a trader at the City of London Markets brokerage, said equities were also seeing follow-through selling after disappointing US data on Tuesday.

“Furthermore, several (factory) data readings out of China overnight painted only a mixed picture possibly indicating that economic growth momentum is already in the process of slowing again,” Mr Huber added.

In Ireland, the ISEQ Overall Index was 1.36pc lower by lunchtime, at 6,405.15.

The decline was led by stocks including Bank of Ireland. It had plunged 5.5pc by early afternoon to under 26 cent, while building materials giant CRH was down 2.1pc at €26.65.

Ryanair was 1.6pc lower at €13.88, while fruit distributor Fyffes was 1.3pc higher at €1.57.

The UK’s FTSE-100 was 1.1pc lower, while Germany’s DAX was 0.8pc down. France’s CAC-40 was 1pc lower.

French travel and tourism stocks, such as Air France-KLM and hotels group Accor led the sector lower.

The French travel industry is already being hit by strikes, and the Euro 2016 soccer tournament, starting next week, is seen as a major security challenge.

Oil and gas shares also fell, tracking weaker oil prices which fell on expectations that an OPEC meeting would shun any curbs on output.

Italian banking shares were also dragged down by Banco Popolare.

It slumped 6.3pc after media reports said Italy’s market watchdog will give its go ahead to the bank’s cash call later today.

Healthcare company Elekta fell 7pc after its first quarter earnings lagged market expectations.

Mining stocks dropped after poor data out on China’s manufacturing activity.

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