European markets flat as French and German PMIs point to renewed downturn

LONDON — European stocks were flat in early trade Monday morning as German and French business activity data pointed to renewed declines in the region’s two largest economies.

The pan-European Stoxx 600 index opened modestly higher, up just 0.06% at the open, with oil and gas, telecoms, technology and banks seeing the strongest start to the day. The index then turned flat shortly after as regional purchasing managers’ index data for France and Germany was released.

France’s CAC index traded almost 0.5% lower after preliminary composite PMI data, a measure of business activity in the manufacturing and services sector, fell in September.

It came in at 47.4, an eight-month low and far below a Reuters forecast of 50.6 — and down from 53.1 in August, HCOB data showed. A reading below 50 indicates contraction territory.

German business activity also contracted in September, with the HCOB flash composite PMI falling from 48.4 in August to 47.2 in September, a seven-month low.

“A technical recession seems to be baked in” to Germany’s gross domestic product (GDP) outlook, according to Cyrus de la Rubia, chief economist at Hamburg Commercial Bank (HCOB).

“Our GDP nowcast for the current quarter, which considers the HCOB PMI among other indicators, now points to a 0.2% decrease compared to the quarter before. In the second quarter GDP already shrank at a rate of 0.1%. There is still some hope that the fourth quarter will be better as higher wages combined with lower inflation should boost not only real income but also consumption, supporting domestic demand.”

Shares of British property portal Rightmove were trading 2% higher after the group reportedly rejected yet another sweetened takeover offer from Australian property listing firm REA Group.

Elsewhere, shares of German bank Commerzbank were down 4.75% in early trade after the German government said at the weekend that it didn’t plan to sell any more shares in the country’s second-largest lender, Reuters reported. The comment was seen as a sign that the government does not favor a takeover after Italian bank UniCredit announced it had bought a 9% stake in the bank to become its second largest shareholder.

Global markets continue to trade higher following the Fed’s 50-basis-point cut last week, its first cut in four years. Asia-Pacific markets were mostly higher overnight as investors digested monetary policy decisions from Japan and China as well as the Fed’s sharp cut.

Dow futures were near flat Sunday night after enthusiasm for last week’s interest rate cut propelled the blue-chip index to a record closing level.