HSBC manufacturing purchasing managers index for China missed comfortably (48.3 against 49.5 expected) and came in at a seven-month low, and our Asia-focused analysts have highlighted to us that movements in important sub-components come across decidedly bearish at what is a twitchy time sentiment-wise.
Europe hasn’t fared much better; falling inflation and sub-50 misses for services and manufacturing PMI for France are the lowlight, with the overall eurozone figures missing estimates but remaining at least the right side of 50. As the morning draws on indices are recovering some early losses, but we are still seeing the DAX trading lower by more than 1%. It is quite a widespread sell-off, with nine of the eleven major sectors of the Stoxx 600 European index in the red.
Bucking the trend in London is Petrofac (+3%), having been awarded a contract by BP (+0.7%) in Oman; in fact, the oilers in general are standing out from the weak crowd today. We are also keeping a close eye on Vodafone (+1%) as the ex-date for the Verizon deal draws closer; Monday will be the first day of trading for Vodafone 2.0. The bonanza three-corporate-actions-in-one will leave investors with roughly 30p of cash and 72p of shares in the US telecoms giant, and analysts have been rushing to push reinvestment ideas for these windfalls. We will be watching UK blue chips of a similar quality as they are expected to benefit from this reallocation of capital.
At the losers table, BAE Systems' outperformance yesterday – having finally agreed pricing on the long running Saudi jet deal – feels a very long way away today. Shares in the defence firm have fallen 8.5% after a fall in full-year profits, and a projected fall in earnings-per-share for 2014 has scared traders away.