European markets open at close, data, news, earnings

US stocks open lower

US stocks opened lower on Thursday, the first day of September, as traders continued to watch the potential for a Federal Reserve rate hike.

The Dow Jones Industrial Average and S&P 500 were both down about 0.5% in early morning trading, while the Nasdaq was down 0.8%.

— Karen Gilchrist

The pound has had its worst month since Brexit, and analysts expect it to ‘reach new depths’

The pound has had its worst month since the day after the Brexit referendum, and analysts expect the pound to fall further as a ‘slowdown in the economy and political paralysis’ grips the UK.

Luke MacGregor | Bloomberg | Getty Images

The pound suffered its biggest monthly drop against the US dollar in August since the fallout from the Brexit referendum, with political uncertainty and a historic cost of living crisis weighing heavily on the British currency.

The pound fell 4.5% against the greenback last month and continued to fall on Thursday, last trading at $1.1566 in early afternoon trading in London. The pound also fell almost 3% against the euro last month.

In a research note on Wednesday, Capital Economics chief UK economist Paul Dales said the divergence will lead to further weakness in the euro and the pound against the US dollar, and expects the pound is “reaching new depths” as political and economic uncertainty continues to hammer the UK. assets.

“We expect the pound to fall from $1.17 now to around $1.05 by the middle of next year. This would leave it below levels reached before the 1985 Plaza agreement (1.09 $), after the UK left the ERM in 1992 ($1.43), during the 2008/09 global financial crisis ($1.38), after the 2016 Brexit vote ($1.21 $) and during the COVID-19 crisis of 2020 ($1.21),” Dales said.

-Elliot Smith

Some market participants are beginning to fear a major policy error from a central bank

A screen displays the Fed’s rate announcement as a trader works (inside a post) on the floor of the New York Stock Exchange (NYSE) in New York City, June 15, 2022.

Brendan McDermid | Reuters

After US Federal Reserve Chairman Jerome Powell reiterated the central bank’s commitment to aggressively raising interest rates to contain inflation, analysts fear the potential impact of quantitative tightening efforts by the Fed from being ignored by the markets.

Quantitative tightening is a monetary policy tactic used by central banks to reduce liquidity and contract their balance sheets, typically by selling government bonds or letting them mature and removing them from the bank’s cash balances.

Analysts at London-based CrossBorder Capital warned that the risk is rising of a “major policy error to come” from the Fed’s course of action, in particular “the impact of excessive QT on financial stability “.

The concern over QT was echoed by Mazars chief economist George Lagarias, who urged traders and investors to forget what they heard from Powell in Jackson Hole and instead focus on the assets of the Fed as the single leading indicator.

-Elliot Smith

UK manufacturing activity beats estimates

UK factory activity offered a rare upside surprise in August, with the S&P Global/CIPS manufacturing PMI coming in at 47.3 versus a consensus forecast of 46.0.

Despite higher expectations, the reading still marks the worst month for UK factories since May 2020, as the country battles a historic cost of living crisis.

-Elliot Smith

Eurozone factory activity contracted in August

Eurozone manufacturing activity contracted for a second consecutive month in August, according to a latest S&P Global manufacturing PMI (Purchasing Managers Index) released on Thursday.

The PMI slipped to 49.6 in August from 49.8 in July and fell below an initial flash reading of 49.7. The 50 mark separates growth from contraction.

Like many economies, the eurozone is facing a cost of living crisis fueled by soaring food and energy bills, which are increasingly forcing consumers to cut spending.

-Elliot Smith

Stocks on the move: Glencore down 5%, Reckitt down 4%

Anglo-Swiss mining and commodities trading giant Glencore saw its shares fall more than 5% in early trading at the Stoxx 600 low.

Shares of Reckitt Benckiser fell 4% after the Anglo-Dutch consumer goods company announced CEO Laxman Narasimhan would step down at the end of the month after a three-year term at the helm.

There was little to report in terms of positive stock price movement in early trades.

-Elliot Smith

CNBC Pro: Goldman Sachs says mutual funds have been on a tear this year. This is what they buy

“A greater share of mutual funds outperformed their benchmarks in 2022 than any year since 2009,” according to Goldman Sachs.

What explains the outperformance? And what are these funds buying?

Pro subscribers can learn more here.

— Zavier Ong

Yield on 2-year US Treasuries hits 14-year high

Caixin PMI shows Chinese factory activity fell in August

The results of a private investigation showed the activity of Chinese factories contracted in August.

The Caixin/Markit index of manufacturing purchasing managers came in at 49.5 in August, down from 50.4 in July.

PMI readings are sequential and represent month-to-month expansion or contraction. The 50-point bar that separates growth from contraction.

China’s official manufacturing PMI for August slightly beat expectations at 49.4.

—Abigail Ng

European markets: here are the opening calls

According to IG data.

The data releases include preliminary eurozone unemployment data for the second quarter as well as gross domestic product for the second quarter. The latest UK inflation figures for July will be released along with the preliminary Dutch Q2 GDP.

Revenue comes from Uniper, Carlsberg, Persimmon, Balfour Beatty, BAT and National Grid.

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