Monday in London saw mixed performance on the FTSE 100, European markets, and US markets as investors await new data and remarks from Federal Reserve chair Jerome Powell on the central bank’s outlook for interest rates.
Later today, Powell will participate in a roundtable discussion.
The FTSE 100 (FTSE) was up 0.2% at the start of the day but was down 1.4% at the closing bell. Paris’ CAC (FCHI) retreated 0.6% after rising 0.6% earlier in the day, and the Dax (GDAXI) in Germany gained 1.2% before falling 1.3%.
The more closely related FTSE 250 (FTMC) fell 1.7%.
The three main US indexes were mixed on the other side of the water. The Dow (DJI) dropped 0.3%, the S&P 500 (GSPC) remained unchanged, and the Nasdaq (IXIC) increased 0.7% after a sluggish start.
The actions follow the World Bank’s reduction of its growth prediction for China for the upcoming year and its warning of a slow expansion amid growing concern over the nation’s productivity decline. The concerns highlight worry that the problems affecting the global growth engine may spread to other developed markets.
The World Bank revised its April forecast for China’s economic production growth to 4.8% to 4.4% for 2024. The pace of growth would be the slowest since the 1960s at this rate.
The Bank cited a number of indicators, including weak retail sales, stable home prices, and rising family debt.
In contrast, the UK’s manufacturing figures, which showed a further contraction in September, left much to be desired.
S&P Global reports that despite decreased inflows of new business from both domestic and foreign clients, output, new orders, and employment were all reduced further. Despite the fact that 55% of businesses anticipate growth over the next 12 months, the prognosis for the industry as a whole remained optimistic during the course of the month.
The most recent UK manufacturing PMI reveals deteriorating circumstances and sentiment in the industry:
The UK manufacturers’ decline persisted during the third quarter. Despite decreased inflows of new business from both domestic and international clients, output, new orders, and employment were all reduced even further. Despite the fact that 55% of businesses anticipate growth over the next 12 months, the prognosis for the industry as a whole remained optimistic during the course of the month.
In September, it received a score of 44.3. Anything less than 50 is a contraction.
The sector is still “mired in contraction territory,” according to Rob Dobson of S&P, with “falling demand from both households and businesses.”
Dobson noted that it’s marginally more encouraging for price inflation while issuing a caution:
On the price front, there was slightly better news for producers as efforts to safeguard margins were assisted by a combination of declining costs and increased selling prices. In the next months, the atmosphere could, however, become less disinflationary as a result of rising oil prices.
Asian markets, notably those in China, appeared to have ignored World Bank warnings of weak growth and concerning debt.
By the closing bell, the Hang Seng (HSI) in Hong Kong had risen 2.5%. The SSE Composite (000001.SS) had a 0.1% increase as well. Despite the upbeat attitude, Evergrande (3333.HK), a property magnate, led falls in China, falling more than 34% in the previous five days due to its mounting debt and legal troubles.
After the Bank of Japan unexpectedly announced that it would interfere in the market for government bonds, the Nikkei (N225) in Japan fell by 0.3%. In the past, it has retreated from a policy of yield curve control.
According to new statistics issued by Nationwide on Monday, UK house prices were stable month-over-month in September but decreased 5.3% annually. This came after an August fall of 0.8% month over month, the quickest pace of decline since 2009.
According to Nationwide’s monthly house price monitor, annual house price declines were seen in all regions during the third quarter.
The South West had the worst performance, with prices falling 6.3% from the previous year.