European markets fell in early trading on Tuesday, tracking losses overnight in the US and Asia as data showed European service sector activity cooled in March and IMF chief Christine Lagarde warned of rising risks to the global economy.
Services PMIs dropped across the Eurozone and the UK with the terror attacks in Belgium seemingly hitting confidence especially hard in France. Spain was one of the few bright spots, reversing three months of declines. In addition, German factory orders unexpectedly fell to a six-month low.
IMF managing director Christine Lagarde has said the global economy is not in a crisis but that the recovery is too slow and risks to its durability are increasing. In her speech, Lagarde outlined a number of reforms that could be undertaken by the US and European countries to improve economic growth. Her downbeat comments are probably to soften up markets for downgrades in IMF forecasts next week.
A three-week low in the price of oil goes someway to explaining deteriorating market sentiment, although the pullback in equities has not been as severe as the one in oil. The Kuwait oil minister saying that “all signs” point to agreement on an output freeze at the meeting of producers in Doha must have meant all the signs not written in Persian. Iran, one of the world’s largest producer when at full capacity, has shown a determination not to freeze production and the Saudi’s appear unwilling to take any action without Iran.
Some heavy declines in industrial metal and oil prices over the past three days is taking its toll on the UK-listed mining companies, with basic resources the worst performing sector on the FTSE 100.
The shares of Britain’s top supermarkets were in the red after the latest Kantar market data showed sales continued to decline. Shares of Sainsbury’s (LON:SBRY) saw the smallest daily decline as it continues to outperform its “big four” rivals.
The panama leaks have put global banks in the spotlight. Barclays (LON:BARC) and Standard Chartered (LON:STAN) were losing over 3% and 4% respectively.
USA pre-opening levels
S&P 500: 21 points lower at 2,045
Dow Jones: 134 points lower at 17,603
Nasdaq 100: 39 points lower at 4,472
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