European shares extended losses at midday on Wednesday as investors eyed US data later in the day and possible production cuts by Opec+ nations.
The pan-European Stoxx 600 index was down 0.82%, with all major bourses lower. Attention was on composite PMI data for UK and the euro zone, and US private payrolls numbers.
“Stock markets are paring gains after a phenomenal rebound on Monday and Tuesday as two weeks of losses were wiped out in just two sessions,” said OANDA analyst Craig Erlam.
“It’s been a very impressive relief rally, albeit one aided by a rose-tinted interpretation of certain economic indicators and a terrible plunge in the weeks before. This isn’t the time to get carried away but it is understandable that we’re seeing some relief. It all hangs on whether the data is the start of a weakening trend or just a blip, as with the July inflation drop.”
Survey data released by S&P Global showed that the eurozone composite PMI fell to 48.1 in September, down 0.1 points from its flash estimate and 0.8pts from the prior month, with both the services and manufacturing PMIs also posting monthly drops.
The manufacturing purchasing managers index was revised lower in September, down from a preliminary reading of 48.5 to a final print of 48.4.
September’s PMI reading, down from 49.6 in August, marked the biggest contraction in factory activity since June 2020, with further slides seen in both output and new orders as a result of high energy prices and adjustments to firms’ operating schedules due to lower order books.
Demand for goods from the eurozone dropped sharply amid high inflation and economic uncertainty that reportedly squeezed client appetite last month.
Investors were also eyeing an OPEC+ meeting on supply following speculation of a large output cut in response to a dimming economic outlook and lower prices.
In equity news, struggling airline SAS gained after it reached agreements with 10 of its lessors representing 36 aircraft to amend the terms of existing lease contracts.
Tesco shares fell 3.3% after the UK supermarket giant said annual profit would be around the lower end of previous guidance, with significant uncertainties over its second half. The news knocked other retailers, with Ocado and Sainsbury’s lower.
Reporting by Frank Prenesti at Sharecast.com
