European stocks fluctuated as investors kicked off the fourth quarter still vary of macro risks, after a decent month of September. Contracts for all three main U.S. equity indexes pointed to a second day of gains on Wall Street, but the Stoxx Europe 600 Index erased an early advance to edge lower after data showed the euro area’s manufacturing sector slumped in September.
The European factory numbers only added to a long list of concerns for investors, including everything from the trade war and Brexit to protests in Hong Kong and an impeachment investigation into U.S. President Donald Trump. Nonetheless, it is hard to predict the outcome of any of these market moving events, making investors befuddled as the safest assets also continue to look expensive.
JPMorgan strategists switched their preference to European shares from the U.S. recently, citing a relative under-performance of c20% over the past 18 months, indicating that European value stocks look appealing given the relatively cheap valuation.
Within FX, the dollar vs pound fluctuations continue as British Prime Minister Boris Johnson prepares to present his blueprint for a new Brexit deal to the European Union.
Oil edged higher after its biggest quarterly drop this year, as investors ponder Saudi Arabia’s quick recovery from attacks last month versus a resumption in U.S.-China trade negotiations coming up next week.
Key data coming out this week:
More European data gets published on Tuesday, most notably euro-zone CPI for September.
We will also have some U.S. numbers being reported this week, including ISM manufacturing on Tuesday, the ADP employment report on Wednesday and the monthly jobs report on Friday.
Head of Investment Research