European Equities Close Lower Following Weak Manufacturing Data and Trading Halt in China

European markets closed lower on the first trading day of 2016 after underwhelming manufacturing data from China coupled with a trading halt in the Asian country sent shock-waves through global markets.

The Caixin China General Manufacturing Purchasing Managers' Index (PMI) - an indicator designed to provide a snapshot of operating conditions in the manufacturing economy - registered below the neutral 50.0 value at 48.2 in December, down from 48.6 in the previous month.

Business conditions in China have now worsened in each of the past 10 months and production fell for the seventh time in the past eight months. China's benchmark index, the Shanghai Composite Index slid by 6.9% before authorities halted trading at 1:35 pm local time for the remainder of the day.

Fluctuations in China's stock markets, as well as economic indicators, stand to have a knock-on effect on export-oriented European equities. As the world's largest consumer of commodities, a potential slow-down in China's economy stands to affect mining companies for whom the country has been a key importer over the past decade.

Meanwhile, within Europe, data on the performance of the shared currency zone's manufacturing sector in December was more promising. The final, seasonally-adjusted Eurozone Manufacturing PMI, which stood at 53.2, rose to its highest level since April 2014 and came in slightly above the earlier flash estimate of 53.1.

In Germany, separate data released by Destatis, the nation's federal statistics agency, indicated that inflation as measured by the consumer price index is expected to be 0.3% in 2015 relative to 2014. Destatis also reported that employment rose by 0.8% over the course of 2015 to end the year with roughly 43 million residents in employment.

In the U.S, the Markit U.S.Manufacturing PMI slid to 51.2 in December, down from 52.8 in November. Although still above the 50.0 threshold, the latest reading marked the weakest improvement in overall business conditions since October 2012.

And, in company news, commodities stocks Anglo American, Glencore and Antofagasta were among the biggest decliners on London's FTSE 100 Index, slumping 7.2%, 5.8%, and 5.0%, respectively. Financial majors Old Mutual, Prudential and Standard Chartered were also lower, by 6.4%, 4.8% and 3.9%, respectively.

On the DAX, electric utility giant RWE slumped 7.1%, followed by energy major E.ON sliding 6.1%. Carmakers BMW and Volkswagen both dropped 5.5%. Financial services providers also posted significant losses with Deutsche Bank and Allianz falling 4.8% and 4.6%, respectively.

And, on the CAC-40, French automaker Peugeot and steelmaker ArcelorMittal led decliners both slipping 4.5%. Luxury goods retailers LVMH Moet Hennessy Louis Vuitton and Kering each fell 3.9% while Engie, a natural gas and electricity supplier, and AXA, a financial services company, were down by 3.6% and 3.7%, respectively.

The FTSE 100 closed 2.39% lower, the DAX slumped 4.28% and the CAC-40 was down by 2.47%.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2016 All rights reserved. Unauthorized reproduction is strictly prohibited.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.