European equity markets faltered at the start of the week as disappointing French data weighed heavy on market sentiment. France’s manufacturing PMI reading slipped further into contraction to 47.8 in June from 49.8 the previous month which dragged down the eurozone composite manufacturing reading from 52.2 in May to 51.9 in June. Preliminary German PMI data fell just shy of expectations in June which further underpinned the sluggish growth outlook in the region. Major stock indices immediately sank lower at the open and remain on track to spend the entire session in negative territory.
Continuing the bearish overtones seen during the European session, Wall Street benchmark indices drifted lower at the open as they whipsawed into positive territory before swinging into negative territory once again as the bulls and bears struggle for control near the record highs reached last week. Broadly positive macro data seems to have shored up support for equities around current levels, with the Chicago Fed national activity index rebounding to 0.21 in May from -0.32 the previous month while the Markit manufacturing PMI reading exceeded expectations by 1.5 points as it came in at 57.5 in June.
Front month Brent crude prices maintained support around $114/bbl today, with intraday moves testing the recent high achieved last week towards $115.70. Ongoing violence in Iraq continues to threaten crude oil output which could see higher prices for near month futures. The risk premium is also supporting spot gold prices, which have stabilised above $1,315/oz after rising to a two and a half month high last week.