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London open: Stocks slide on further contraction in China manufacturing
UK stocks dropped after a worse-than-anticipated report on Chinese manufacturing added to concerns about the slowdown in the world’s second largest economy.
The official government’s purchasing mangers’ index on manufacturing showed a reading of 49.8 for October, unchanged from the previous month but below the 50 that was forecast. A level below 50 signals a contraction while a reading below that indicates expansion.
The Caixin’s PMI on manufacturing rose to 48.3 in October from 47.2 in September but marked the eighth successive month of contraction.
“The official PMI showed new export orders contracting for a 13th consecutive month which is consistent with the cooling global growth that we’ve been seeing but the more worrying thing is that the domestic economy isn’t doing enough to pick up the slack,” said Craig Erlam, senior market analyst at Oanda.
“The PBOC recently announced another batch of stimulus measures but with the data continuing to point to slower growth, more is likely to be needed.”
The US will also see the release of manufacturing data in afternoon trade on Monday along with construction spending figures.
On the company front, HSBC slid after reporting adjusted third quarter pre-tax profit that missed analysts’ expectations.
Royal Dutch Shell was in the red after completing the sale of its Butagaz liquefied petroleum gas business in France to DCC Energy for €464m following the announcement in May.
Hikma Pharmaceuticals slumped after saying its generics division is currently below its expectations due to slower-than-expected growth in colchicine sales. The group lowered full-year guidance for the generics business to revenues of around $150m, down from a previous range of $175m to $200m.
