Eurozone PMI Reports Signal More Contraction
Final October Eurozone Manufacturing PMI Reports from Markit Economics indicate widespread declines.
The disappointing Final October Eurozone Manufacturing PMI reports from Markit Economics came as no surprise to European investors on Friday, as the major European stock indices had been holding at or near the breakeven level 
during the early hours of the trading session. The preliminary “flash” versions of the Eurozone Manufacturing PMI had been released by Markit on October 24, so Friday’s news was not particularly new (NYSEARCA:VGK). European Stocks Advance Despite Downbeat PMI Data
Markit’s Final October Eurozone Manufacturing PMI dropped to 45.4 in October, from 46.1 in September. Storm Clouds Over the Eurozone The final number was a slight uptick from the flash figure of 45.3. Job losses were recorded in all Eurozone nations except Ireland.
From the report:
The downturn not only deepened, but also widened during the latest survey period. Only the Irish PMI stayed above the neutral 50.0 mark, as the Dutch PMI edged back into contraction territory. Rates of contraction accelerated in Germany, Italy, Spain, Austria and Greece. Although the downturn in France eased slightly, it remained stronger than the euro area average.
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Countries ranked by Manufacturing PMI® (Oct.)
Ireland 52.1 3-month high
Netherlands 48.9 3-month low
Germany 46.0 2-month low
Italy 45.5 2-month low
Austria 44.8 40-month low
France 43.7 2-month high
Spain 43.5 3-month low
Greece 41.0 4-month low
Although American stock market commentators frequently explain advances in the European stock indices as the result of economic developments in the United States, Friday marked one of the rare occasions when such an observation would have been accurate. A review of the charts of the major European indices reveals that it was not until just after 8:30 EDT– when the United States Bureau of Labor Statistics released its better-than-expected October non-farm payrolls report – when European stocks began to climb.
As of 10:12 EDT, the Euro STOXX 50 Index advanced 0.32 percent to 2,542 (NYSEARCA:VGK). The FTSE 100 Index dipped 0.03 percent to 5,860 (NYSEARCA:EWU). The German DAX Index rose 0.34 percent to 7,360 (NYSEARCA:EWG). France’s CAC 40 Index crept upward by 0.12 percent to 3,479 (NYSEARCA:EWQ). Spain’s IBEX 35 Index climbed 0.31 percent to 7,910 (NYSEARCA:EWP). Italy’s FTSE MIB Index declined 0.28 percent to 15,763 (NYSEARCA:EWI).
As of 10:20 EDT, the euro declined 0.70 percent against the dollar, trading at $1.2852 (NYSEARCA:FXE).
Spain’s ten-year bond yield climbed to 5.63 percent on Friday from Thursday’s closing level of 5.59 percent. Spain’s two-year bond yield rose to 2.99 percent on Friday from Thursday’s closing level of 2.94 percent (NYSEARCA:EWP).
Italy’s ten-year bond yield dipped to 4.96 percent on Friday from Thursday’s closing level of 4.98 percent (NYSEARCA:EWI).
On London’s ICE Futures Europe Exchange, December futures for Brent crude oil advanced by 5 cents (0.05 percent) to $108.22/bbl. (NYSEARCA:USO). Oil ETFs Correct with Equity Markets
December Gold futures declined by $21.10 (1.23 percent) to $1,694.40 per ounce (NYSEARCA:GLD).
In China, stocks advanced following a report from China Business News, which discussed increases in real estate sales during September and October. SAIC, the nation’s largest automobile manufacturer reported that its net income rose 1.4 percent during the third quarter. The Shanghai Composite Index advanced 0.60 percent to 2,117 (NYSEARCA:FXI). Hong Kong’s Hang Seng Index jumped 1.33 percent to 22,111 (NYSEARCA:EWH).
In Japan, stocks made huge gains as the yen continued to weaken, causing the nation’s exports to be more competitively-priced in overseas markets (NYSEARCA:FXY). The Nikkei 225 Stock Average surged 1.17 percent to 9,051 (NYSEARCA:EWJ).
American stock index futures were in positive territory ahead of Friday’s opening bell, after the October non-farm payrolls report indicated that 171,000 new jobs were added, beating expectations of 125,000. The December 12 Dow Jones Industrials future advanced 0.27 percent to 13,200 as of 9:15 EDT. The December 12 S&P 500 future rose 0.39 percent to 1,428 (NYSEARCA:SPY). The December 12 Nasdaq 100 future climbed 0.18 percent to 2,689.
Bottom line: The major European stock indices made healthy advances on Friday, after America’s surprisingly upbeat non-farm payrolls report overshadowed the Final Markit October Eurozone Manufacturing PMI report.
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