European equity indices faced another difficult session after the release of Chinese flash manufacturing PMI which showed a surprise fall to 48.3 from 49.5 the previous month, hinting at a prolonged slowdown of momentum. London’s blue chip index opened sharply lower and spent most of the day under pressure, dragged down by miners and industrials before a late stage rally saw the index close 0.08% higher, following Wall Street’s stronger open.
Investors hoping for some respite from a steady stream of economic data were left disappointed as the release of February’s manufacturing and services PMI for France, Germany and the eurozone all came in lower than expected, raising concerns regarding the demand outlook. Eurozone manufacturing PMI missed the mark by 1 point, coming in at 53 against an expected reading of 54 according to a Bloomberg survey while the services PMI came in 0.2 points below expectations at 51.7 in February.
Wider European markets also started the day on the back foot, but managed to recover some territory after the strong US open. Wall Street was supported higher by a stronger Markit preliminary reading for February, which surged to 56.7 from 53.7 the previous month. At the time of writing both the S&P 500 and DJIA were trading with modest gains as they hovered around recent highs despite the slightly weaker than expected initial weekly jobless claims which came in 1,000 above expectations at 336K and the significant decline in the Philly Fed business outlook survey, which dropped to -6.3 in February from 9.4 the previous month on concerns that growth momentum was slowing.