European shares fell at the open on Wednesday, as traders struggled to shake off negative sentiment that plagued global markets in late 2018.
The pan-European Stoxx 600 fell more than 1 percent in morning trade, with all sectors and major bourses in the red. Basic resources stocks were the worst performers, with the sector down almost 2.6 percent on the back of weak Chinese manufacturing data.
Looking at individual stocks, shares of German manufacturing firm Gerresheimer fell almost 5.7 percent, hitting their lowest level since July 2015 after a downgrade from J.P. Morgan.
The European Central Bank appointed temporary administrators to take charge of troubled Italian lender Banca Carige on Wednesday after a majority of the bank’s board members — including its chief executive — resigned. Trading in Banca Carige’s shares were suspended by Italy’s market watchdog early Wednesday morning.
Shares of other Italian lenders fell, with UBI Banca down 3.8 percent and BPER Banca off by 3.4 percent.
The first trading day of the New Year was beset by data showing Chinese factory activity contracted in December for the first time in 19 months. The Caixin/Markit Manufacturing Purchasing Managers’ index (PMI) fell to 49.7 in December, down from 50.2 in November, and versus an expected 50.1. A reading above 50 indicates expansion, while a reading below that figures signals contraction.
The data arrives on the back of a tense trade war between the U.S. and China. The two countries are trying to resolve their differences over a 90-day truce period. President Donald Trump last week said he and Chinese President Xi Jinping “had a long and very good call” covering “all subjects, areas and points of dispute.”
Asian stocks were mixed as a result of the data released Wednesday, with China’s Shanghai composite falling around 1 percent and the Shenzhen composite sliding over 0.4 percent. U.S. futures were in negative territory, meanwhile, with the Dow expected to open more than 200 points lower.
December was a harsh month for global equity markets, with shares falling on fears of a potential worldwide economic slowdown and worries around the pace of central bank tightening. U.S. stock indexes posted their worst year since 2008; Europe’s pan-European Stoxx 600 also suffered its worst year in a decade.
In corporate news, Deutsche Telekom has reportedly filed a lawsuit against the German government over a 5G auction. German newspaper Die Welt reported Tuesday that the telecommunications giant’s lawsuit contested a set of preconditions for participating in the auction, which would require bidders to invest to expand the country’s mobile network and potentially allow new entrants to use their infrastructure.
Wednesday is a busy day in terms of data releases, with French, German, British and euro zone PMI manufacturing index numbers due early in the morning.
Elsewhere, traders are looking ahead to an upcoming joint discussion between Federal Reserve Chairman Jerome Powell and former Fed chiefs Janet Yellen and Ben Benanke later this week. The Fed hiked interest rates four times in 2018, but expectations for further increases this year have soured amid concerns around waning economic growth.
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