(Bloomberg) — Stocks in Europe struggled for traction on Thursday and bonds fell as activity surveys showed a recession in the euro area is looking increasingly likely.
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S&P Global’s purchasing managers’ index was in contraction again in November, hitting 47.1, data showed. While that’s a bigger uptick than anticipated by economists, it marks the sixth consecutive month below the 50 level that indicates expansion.
“It is still too early to become constructive on the euro and eurozone economy, which is now likely experiencing a shallower recession and not the beginning of a period of re-acceleration,” said Simon Harvey, head of FX analysis at Monex Europe.
Dutch firms were among the biggest decliners in the Stoxx Europe 600 index after far-right lawmaker Geert Wilders won a shock victory in the country’s elections. Wilders has promised voters a binding referendum on leaving the European Union. Lender ING Groep NV fell as much as 3% in Amsterdam, while chipmaker ASML Holding NV shed 1.1%.
Among other individual movers, Virgin Money UK Plc fell as much as 4.4% after the UK bank’s results missed estimates due to higher impairments and costs. Endesa SA dropped more than 3% after the Spanish utility unveiled a strategic plan that failed to impress analysts.
Swedish stocks jumped and the krona weakened after the country’s central bank in a surprise move decided to leave its main benchmark rate unchanged at 4%. Analysts had expected an increase to 4.25%.
Peter van der Welle, a multi-asset strategist at Robeco Institutional Asset Management, said he remains cautious about the outlook for stocks in 2024 as he expects pressure on corporate earnings amid slowing economic growth. “While credit has not been fully pricing a mild recession, we find the asset class attractive relative to equities.”
The euro and yen edged higher as the dollar surrendered Wednesday’s gains. Germany’s 10-year yields rose more than three basis points.
US equity futures were little changed. There is no Treasury cash trading on Thursday due to the Thanksgiving holiday, while Japanese markets are also closed.
OPEC+ Discord
In commodity markets, crude oil extended a decline as discord within OPEC+ forced the group to delay an upcoming meeting, quelling speculation of further production cuts by the Saudi-led alliance. Brent crude sank below $81 a barrel after a volatile session on Wednesday that saw prices swing by more than $4, while West Texas Intermediate was near $76.
“On the macro economic data, I don’t see enough positive signals to give me the confidence of a booming market next year,” Carol Nakhle, Chief Executive Officer of Crystol Energy, said on Bloomberg Television. “Even with oil demand forecast, we see today a big difference between what the International Energy Agency is expecting for 2024 and what OPEC is expecting.”
Iron ore tumbled from from a nine-month high after Chinese authorities stepped up a campaign to try and cool the rally in the steelmaking ingredient. Bloomberg’s industrial metals subindex dropped by the most in two months as prices of nickel, copper and aluminum also retreated.
In Asia, Country Garden Holdings Co.’s shares and bonds surged in Hong Kong following news that Beijing included the builder in a draft list of 50 developers eligible for financial support, the latest move to plug an estimated $446 billion gap in funding needed to ease the housing crisis. A gauge of property stocks rallied 7%, set for its best week since early September.
Key events this week:
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Thanksgiving holiday — US markets closed — Thursday
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ECB publishes account of October policy meeting, Thursday
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Germany IFO business climate, Friday
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US S&P Global Manufacturing PMI, Friday
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Black Friday, traditional kick-off for the US holiday shopping season
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ECB’s Christine Lagarde speaks, Friday
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 rose 0.1% as of 12:38 p.m. London time
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S&P 500 futures were little changed
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Nasdaq 100 futures rose 0.1%
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Futures on the Dow Jones Industrial Average were unchanged
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The MSCI Asia Pacific Index rose 0.3%
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The MSCI Emerging Markets Index rose 0.4%
Currencies
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The Bloomberg Dollar Spot Index fell 0.2%
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The euro rose 0.1% to $1.0902
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The Japanese yen rose 0.1% to 149.33 per dollar
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The offshore yuan rose 0.3% to 7.1430 per dollar
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The British pound rose 0.4% to $1.2546
Cryptocurrencies
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Bitcoin fell 0.6% to $37,415.73
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Ether fell 1% to $2,062.02
Bonds
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The yield on 10-year Treasuries was little changed at 4.40%
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Germany’s 10-year yield advanced two basis points to 2.58%
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Britain’s 10-year yield advanced six basis points to 4.22%
Commodities
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Brent crude fell 0.9% to $81.23 a barrel
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Spot gold rose 0.1% to $1,992.81 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson and Sagarika Jaisinghani.
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