LONDON: U.S. equity-index futures fell with Asian stocks as a report showed contraction in China’s manufacturing sector continuing through October, rekindling concerns about the world’s second-largest economy. Turkish assets surged after the party co-founded by President Recep Tayyip Erdogan was restored to power.
Standard & Poor’s 500 Index futures dropped 0.3 percent by 9:10 a.m. in London, with a measure of Asia-Pacific stocks sliding 1.2 percent. The Stoxx Europe 600 Index was little changed after sliding 0.7 percent, with HSBC Holdings Plc among the biggest drags after reporting earnings. Pharmaceutical companies declined amid the continuing controversy surrounding Valeant Pharmaceuticals International Inc.
Commodities fell as a private gauge of Chinese factory activity in October came in at 48.3, higher than the previous month’s reading but still below 50, the border between expansion and contraction. The lira jumped the most since 2008 as the AK Party won a clear majority, putting an end to months of political uncertainty. Italian and Spanish bonds slid.
Today’s China factory report comes after an official gauge out Sunday showed a third month of contraction, albeit at the same pace as in September. The slowing of China’s economy is having knock-on effects globally as its demand for raw materials and inputs from other emerging markets plunges, with South Korea’s exports sliding 16 percent last month. Investors will be watching this week’s U.S. employment reports after boosting the odds on the Federal Reserve increasing interest rates at its next meeting to 50 percent.
“While you get the ebbs and flows from this monthly data relative to expectations, the overall outlook is one of timid and sluggish activity in the Chinese economy,” Chris Green, an Auckland-based strategist at First NZ Capital Ltd., said by phone. “We’re not expecting a protracted downturn but it will require further policy response from the PBOC to stabilize the growth profile in China. The bigger thing this week is the U.S. jobs data, which could reinforce the prospects of a December move by the Fed.”
Stocks
Charles Munger, Warren Buffett’s longtime business partner, took aim at Valeant’s business model in an interview Saturday, describing its practice of acquiring rights to treatments and boosting prices legal but “deeply immoral.”
