The European stock market declined Thursday morning after a new set of disappointing data was released by Markit.
Friday, November 21, 2014
The Purchasing Managers’ Index (PMI) composite output index for the eurozone in November reached a score of 51.4, its lowest reading in 15 months. The mark fell short of October’s score of 52.1. A reading above 50 indicates expansion, while a score below 50 shows contraction.
Individual PMI scores for Germany and France – 50.0 and 47.6, respectively – also failed to reach analysts’ expectations.
Markit chief economist Chris Williamson said that the PMI numbers likely indicated a 0.1% rise in eurozone gross domestic product for the fourth quarter.
The European Central Bank “will no doubt be disappointed that recent announcements and stimulus measures are showing no signs of reviving growth,” Williamson said in a statement. “The deteriorating trend in the surveys will add to pressure for the ECB to do more to boost the economy without waiting to gauge the effectiveness of previously announced initiatives.”
European stocks fall as investors await ECB stimulus
The Stoxx Europe 600 declined 0.5% by mid-morning Thursday, The Wall Street Journal reported. Germany’s DAX lost 0.6%, France’s CAC 40 fell 0.8% and Italy’s FTSE MIB dropped 1.3%. Even the UK – located outside the eurozone – slumped 0.4%.
European Central Bank President Mario Draghi alluded to further stimulus tools earlier in the week and now some investors are waiting for him to take action. Specifically, Draghi mentioned the use of sovereign bond purchasing or quantitative easing. However, other economists doubt the efficacy of such programs.
“The eurozone appears to be losing all the momentum it had,” Jeremy Batstone-Carr, chief economist at Charles Stanley in London, told The Wall Street Journal. “This [PMI] data will launch a thousand notes about why Draghi must embark on [quantitative easing] sooner rather than later. But as we have seen in Japan, it does very little for the real economy.”
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