European stock markets experienced declines on Tuesday, influenced by weak Chinese economic data just ahead of the release of the final business activity figures for the region.
At 03:25 ET (07:25 GMT), Germany’s DAX index was trading 0.5% lower, the FTSE 100 in the U.K. had fallen 0.6%, and France’s CAC 40 dropped 0.8%.
Weak Chinese Data Dampens Global Sentiment
The release of a private-sector survey showing that China’s services activity expanded at its slowest pace in eight months in August contributed to a dip in sentiment. Despite stimulus efforts, China’s second-largest economy has yet to see a significant revival.
The Caixin services purchasing managers’ index (PMI) rose to 51.8 in August, lower than expectations for a reading of 53.6 and July’s figure of 54.1. This disappointing reading offset some of the optimism generated on Monday after property developer Country Garden received bondholder approval to extend some debt deadlines, averting a potential default.
China is a major market for Europe’s largest companies, and the ongoing challenges in its economy have weighed on their financial performance.
Eurozone Services Activity Likely to Disappoint
In Europe, Spanish services PMI unexpectedly slipped into contraction territory in August, dropping to 49.3 from 52.8 the previous month. Similar readings across Europe are expected to paint a similarly challenging picture of the region’s economy.
A series of soft eurozone data, particularly from Germany, Europe’s largest economy and a major growth driver, has raised the likelihood of the European Central Bank (ECB) pausing its rate-hiking cycle later this month. ECB President Christine Lagarde is set to speak later on Tuesday, and her comments will be closely monitored for clues regarding further action.
Renault’s EV Division on Course for IPO
In corporate news, Renault’s Ampere electric vehicle division could receive a valuation of up to 10 billion euros ($10.8 billion) during its initial public offering (IPO), according to Chief Executive Luca de Meo. Renault’s stock saw a 0.4% rise on Tuesday. While the French auto giant is planning to list Ampere in the spring of 2024, market conditions will play a crucial role in the decision.
Crude Oil Prices Slightly Lower
Oil prices edged lower on Tuesday due to weak Chinese services activity data, signaling more challenges for the world’s second-largest economy and the largest crude importer. However, these losses remained minimal as traders awaited news of an extension in supply cuts by leading OPEC+ members Saudi Arabia and Russia, which would further tighten the market.
As of 03:25 ET, U.S. crude futures traded 0.4% lower at $85.67 a barrel, maintaining proximity to levels last seen in November. Meanwhile, the Brent contract dropped 0.4% to $88.61, remaining close to its highest level since late January.
Gold Futures Dip Slightly
Gold futures experienced a 0.1% dip to $1,962.25 per ounce, while EUR/USD traded 0.3% lower at 1.0764.