Europe midday: Stocks wobble as China concerns continue to weigh; ADP report eyed

Europe midday: Stocks wobble as China concerns continue to weigh; ADP report eyed

LONDON (ShareCast) – (ShareCast News) – European stocks fluctuated between gains and losses on Wednesday, with worries about an economic slowdown in China continuing to weigh, ahead of a US employment report that’s considered a pre-cursor to the all-important nonfarm payrolls.
At 1140 BST, the benchmark Stoxx Europe 600 index was flat, while France’s CAC 40 and Germany’s DAX were 0.3% firmer.

“Today’s action after the open still suggests that rallies are there to be sold, rather than dips being bought,” said Chris Beauchamp, market analyst at IG (LSE: IGG.L – news) .

Weak manufacturing data dented equity markets on Tuesday and although indices in Europe initially bounced back from losses on Wednesday morning, stocks soon began to struggle for direction.

Aside from China, questions over the timing of a rate hike by the Federal Reserve continued to play on investors’ minds.

On Tuesday, Federal Reserve Bank of Boston president Eric Rosengren said global economic weakness and uncertainty over inflation warrant caution as to the timing of a rate rise.

“Given current and forecast conditions, not only is the pace likely to be gradual, but the federal funds rate in the longer run may be lower than in previous tightening cycles,” he said in a speech.

Rebecca O’Keeffe, head of investment at Interactive Investor, said that despite recent market turbulence, “the probability of a rate rise in September remains delicately poised at around 50%.”

“Ahead of the long Labour Day weekend in the US, changes in this perceived probability could push the market violently in either direction,” she added.

In corporate news, Alstom (Paris: FR0010220475 – news) gained after a press report suggesting that General Electric is set to win European regulators’ approval for its purchase of the French company’s energy business.

Swiss pharmaceutical company Novartis (Xetra: 904278 – news) rose after announcing that it has formed a partnership with Amgen Inc (HKSE: 4332.HK – news) to develop new drugs for Alzheimer’s disease and migraines.

Irish carrier Ryanair rallied after saying traffic grew 10% year-on-year to 10.4m customers, while the load factor, which measures how many seats were actually taken up on each flight, rose 2% to 95%.

Retailer Tesco was in focus following media reports that it has chosen private equity firm MBK Partners as preferred bidder for its South Korean unit, Homeplus.

Industrial equipment rental firm Ashtead added gains after reporting better-than-expected first quarter pre-tax profits.

Data released earlier showed factory gate prices in the Eurozone fell in July, weighed down by lower energy quotes. An index of producer prices in the euro area slipped by 2.1% year-on-year, in line with expectations. In comparison with the prior month, prices were down by one tenth of a percentage point.

Still to come on the economic calendar in the US, the ADP employment report is at 1315 BST, while industrial new orders are at 1500 BST.

Europe midday: Stocks wobble as China concerns continue to weigh; ADP report eyed