European equity markets opened the week in the negative side, as disappointing European PMI manufacturing data weighed heavily on market sentiment, raising fresh doubts about Eurozone’s economic stability and current prospects. The CAC, DAX, IBEX, FTSE MIB and London equity benchmark declined sharply between 0.65% and 1.85%, while the euro plunged sharply below 1.25 to test today’s low at 1.2440.
On the macroeconomic front, a strong reading of the UK Markit manufacturing PMI (53.2 vs. 51.4 expected) has been overshadowed by poor manufacturing data from Eurozone and Germany, while France’s manufacturing PMI remained below the key level of 50.0 in October, at 48.5.
In the US, Markit manufacturing PMI fell to 55.9 in October compared to 56.6 in September, missing analysts’ expectations. US construction spending declined unexpectedly by 0.4% in September against analysts’ estimates of a 0.7% rise, raising concerns that US consumers were prompted to saving instead of spending immensely ahead of the Christmas and Thanksgiving holidays. However, the ISM manufacturing index managed to beat estimates at 59.0 in October.
The USD index hit a 4-year high after testing a high at 87.40 in today’s session, offering mixed sentiment across commodity prices. Crude oil prices came under renewed pressure following ongoing increases of crude oil inventories with WTI front month futures breaching again below $80 per barrel.
Base metal prices climbed higher with the exception of Nickel. The recent tepid Chinese manufacturing data initially added some pressure to the base metals market, but market participants focused more on a positive reading of the US ISM manufacturing. Copper climbed above $6,700, while aluminium rallied strongly over 1.4% towards $2070. Lead and Zinc were also trading higher and Tin broke above 19,770.
This week, the main focus will turn to Friday’s non-farm payroll report for October, especially as recent weekly jobless claims have been significantly lower. It is a busy week for central banks as the European Central Bank, Bank of England and Reserve Bank of Australia have planned their monthly monetary policy meetings.