A lot has happened in a day on the market front.
On the United States front, President of the United States, Donald Trump has expressed unhappiness with the performance of the Federal Reserve, especially its chairman, Jerome Powell. His comments have jeopardized the state of the Fed and the US.
On the other hand, Eurozone is lagging too, with negative pressure from different fronts.
Trade Wars Send Eurozone Growth Lower
It looks like corporate growth in Eurozone is slowing down, as trade wars and tariffs are still persistent. Thus, economic demand in the zone is being hit by these two,, stringent problems, which have had an adverse impact on the zone’s economic growth.
In Europe, firms reported a decline in exports, especially manufacturing. New export orders for goods dropped for the first time in 5 months. This news sent everybody in a state of shock.
As a result of the decline in economic activity in Europe, the Markin’s Flash Eurozone PMI Composite Output Index fell to 52.7, which was its 25-month low. It is down from 54.1 in September.
A reading above 50 shows that there has been growth, so the figures today show that there has been growth in Europe. But, if we compare it from the figures before, it is suffice to say that growth in Europe has clearly dropped.
Germany Amongst The Worst-Hit
Germany is one of the main economies in Europe to get hit by the economic crisis adversely. In fact, it was one of the worst hit economies.
In Germany, factory output increased by its smallest in nearly 4 years. Moreover, service sector growth dropped and was it’s slowest since May.
According to Chris Williamson of “Markit’s”, the European zone might be heading in deeper waters.
He expressed his concerns that the last three times manufacturing data moved in the decline in Europe, the downturn was short lived. However, after assessing the weakness in European zone today, especially the fact that it is auto-related, the drop in October shows that the next drop will be far more worrying.
In October, the PMI out also dropped in Europe, which further increased concerns amongst experts.
The European Markets
European stock markets were similar to Asian markets on Tuesday, as investors were skeptical about the geopolitical outlook. It sent investors worrying. Investors are quite worried about the risks in the world economy and Eurozone.
The potential problems associated with the world economy include trade disputes between the largest economies in the world (US and China), the death of Jamal Khashoggi, US interest rates, fight between EU and Italy and more.
European stocks fell sharply on Tuesday. The FTSE 100 of UK dropped by more than 90 points, as it closed below 7000. Moreover, the leading German stock index fell by over 2%, whereas the biggest companies in France dropped by nearly 1.7% in their value.
Moreover, the FTSE 100 declined by 7% since end September, one of its worse performances in some time now. Investors in the UK also had a weak sentiment regarding investments. In 23 years, this was probably the lowest for UK investors.
The sell-offs in Europe and US were still there but Wednesday morning, markets in the Asian zone started off on a positive note.
This makes things very clear: The Eurozone is in jeopardy and investors are reacting! It also seems like things might be shaky in the coming weeks too.