Market update: Eurozone manufacturing PMI contraction eases

Source: Henderson Global Investors

Although US equities finished Friday in negative territory (Dow Jones -0.8%; S&P 500 -0.4%) and ended June lower, they nonetheless enjoyed their strongest first half of the year since 1998. Volatility remained a feature of the market as investors tried to come to terms with the fact that the US Federal Reserve (Fed) might start tapering its US$85bn of monthly asset purchases sooner rather than later; at the end of the week Fed Governor Jeremy Stein suggested that September could potentially be a good time to start scaling back the stimulus. 

Overnight, Asian shares have slipped, hindered by news that Chinese factory activity had reached its lowest level in nine months in June. The HSBC/Markit Purchasing Managers' Index (PMI) fell further into contraction territory (below 50) to 48.2, down from 49.2 in May.

European markets are mixed this morning (FTSE 100 +0.3%; FTSE Eurofirst 300 +0.1%), with investors reacting to the news that the eurozone manufacturing sector contracted again in June – albeit less severely. Markit’s flash eurozone composite PMI rose to 48.8, up from 48.3 in May. Rates of contraction eased in France, Italy, the Netherlands, Austria and Greece.