Stocks

European shares dip as investors eye PMI data, ECB meeting

Reuters | Updated on January 20, 2020 Published on January 20, 2020

European shares retreated on Monday after striking a record closing high in the previous session, as investors paused before launching into a week packed with economic data and the European Central Bank's first policy meeting of the year.

The pan-European STOXX 600 index was down about 0.3 per cent, after gaining nearly 1 per cent on Friday on optimism around US-EU trade talks to address long-standing issues such as a French digital tax and aircraft subsidies.

Market activity was thin on Monday on account of the Martin Luther King Jr. holiday in the United States, with Asian shares hovering near 20-month highs.

The benchmark European index has risen about 2 per cent in January, as investors bet on faster global growth amid improving economic indicators and cooling US-China trade tensions.

For the week, all eyes will be on readings of the Purchasing Manager's Index (PMI) from the euro zone, after a recent Reuters poll showed economists expected a slowdown in the bloc to have bottomed out in 2019.

“Markets increasingly think that we have seen the bottom regarding the industry so if the PMIs would surprise on the downside, that would be a risk to market sentiment,” said Teeuwe Mevissen, senior market economist at Rabobank.

Traders will also look to comments from ECB Chief Christine Lagarde on inflation and economic growth in 2020 at the central bank's first policy meeting for the year on Thursday, where the bank is expected to keep the deposit rate unchanged after cutting it in September for the first time since 2016.

“The ECB rendezvous will likely be the most interesting one as the new president launches the central bank's second strategic review in the euro's two decade history,” said Hussein Sayed, chief market strategist at FXTM.

Among individual movers, German genetic testing company Qiagen rose 4 per cent to the top of the STOXX 600 index after a report the firm was talking to an interested party about a possible acquisition.

British shopping centre operator Intu Properties tumbled 7.5 per cent after saying it was targeting an equity raise by the end of February to tackle debt.

Premium tonic water maker Fevertree Drinks Plc hit its lowest level in over two years as it said annual revenue growth of 10 per cent would be below its expectations, hurt by subdued Christmas trading in Britain. The company's shares were on track for their worst session ever.

Published on January 20, 2020
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