Last checked at LONDON (Alliance News) - Stocks across Europe and futures on Wall Street are trading lower midday Friday following weak manufacturing data from China and the announcement of snap elections in Greece.
"China and Greece have been dominating the headlines in recent months, and now they have both taken a nasty turn at the exact same moment, leaving traders terrified as panic selling becomes widespread. Greece is staring into the political abyss and China is cooling off at an alarming rate," says David Madden, market analyst at IG.
Greek Prime Minister Alexis Tsipras announced his resignation Thursday, hours after Greece received the first payment from its third internationally backed bailout in five years. He said he called the elections because if he is to continue governing, he needs a strong mandate going into talks about further reforms to the Greek economy.
In a vote last week, Tsipras failed to garner a majority vote among his government on further spending cuts. Forty-four members of the governing coalition voted against the measures, all of whom sided with the left wing of his Syriza party.
Greek media reported Friday that 25 hard-left Syriza lawmakers want to break away from the ruling party and form their own parliamentary faction ahead of snap elections on September 20. The rebels, who refused party leader Alexis Tsipras their support in a vote on further austerity and reforms last week, will call their party National Unity. It will be the third-largest bloc in parliament after Syriza, which then would have 124 members, and the conservative Greek opposition party Nea Dimokratia, with 76.
Furthermore, the head of the conservative Greek opposition party now will have a chance to form a new government following the surprise resignation of Tsipras, according to an email from the president's office. The head of the next-largest party gets a chance to form a government after the sitting premier resigns. However, observers say it is unlikely that ND head Evangelos Meimarakis will be able to pull together a government.
"Politics in Greece are so fractured it's difficult to imagine any party getting into office and staying there for a prolonged period. Dealers fear that Greece is doomed to a future of short-lived ineffective governments which will add to its financial woes," says IG's Madden.
The FTSE 100 trades down 1.0% at 6,306.68, having fallen to a low of 6,286.95 at the open, its lowest level of 2015 so far. The FTSE 250 trades down 1.1% at 17,051.91 and the AIM All-Share is down 1.1% at 735.23.
European stocks also trade lower, with the CAC 40 in Paris down 1.2% and the DAX 30 in Frankfurt down 1.1%.
Wall Street is pointed to a lower open, with the DJIA indicated 0.4%, the S&P 500 0.3% lower and the Nasdaq 100 0.5% lower.
The preliminary Caixin manufacturing purchasing managers' index provided more evidence of China's weakening economy. The PMI score fell to 47.1, which is down from 47.8 in July and missed expectations of a slight fall to 47.7. It also moves further beneath the line of 50 that separates expansion from contraction. New orders decreased at a faster rate, as did new export orders, employment, output prices, stocks of purchases and quantity of purchases.
Analysts expect further easing measures to be taken by the Chinese central bank to help mitigate the slowdown in the economy and stock market. Chinese stock indices closed heavily lower Friday, with the Hang Seng in Hong Kong down 1.5% and the Shanghai Composite down 4.3%. The Shanghai index shed nearly 12% over the course of the week.
On the UK corporate front, Spire Healthcare Group is the worst performer in the FTSE 250, down 13%. The private healthcare provider cut its revenue guidance for 2015 due to short-term challenges it expects to face in UK National Health Service activity in the second half, as it reported a rise in pretax profit and revenue for the first half.
The private health company now expects flat revenue in the second half of 2015, compared to previous guidance of low single-digit growth, due to a slowdown in the flow of cases from the NHS to the independent sector in recent weeks. The cut to the revenue guidance means the group now expects its revenue and earnings before interest, taxation, depreciation and amortisation growth to be 4% to 6% for the full year.
Spire highlighted that whilst there is increasing demand for healthcare services in the UK, there is a general acceptance amongst major political parties and market commentators that the NHS is "on track to experience a significant and growing funding gap over the next five years, which is likely to be only partly alleviated by productivity improvements and cost efficiencies."
SIG is up 2.5% after Liberum upgraded the building products company to Buy from Hold, saying it likes that the group is targeting gross margin recovery in the face of competition in Europe. Analyst Charlie Campbell cited three reasons to be positive on SIG's outlook, including a commitment to restoring margins, good momentum in its cost savings programme, and an improving outlook in key markets.
In the AIM All-Share index, Marechale Capital's share price has more than doubled after the energy investment company said that a Kettering County Council committee will hold a meeting later this month to consider a planning application made over the proposed site of a project for Northfield UK Solar, a company in which it owns a 26% stake.
Responding to an early rise in its share price, Marechale said: "Should the committee approve the application, Northfield will move onto the next stage of developing the project - including seeking to contract for the construction of the site."
CPPGroup trades up 40% after the assistance products company said it expects its underlying operating profit to be "materially higher" in 2016 than previously expected, although its revenue will be "materially lower" following the closure of Airport Angel. CPP swung to a net profit of GBP17.1 million in the half, compared with a GBP2.7 million net loss in the prior-year period.
Not faring as well, miner Kodal Minerals said it has received the results of the drilling programme launched at the Grimeli copper and nickel project in Norway, with high-grade copper and zinc occurrences confirmed at the site.
The company said the best copper grade seen in the drilling was 8.39%, while the best zinc grade was 6.98%. Chief Executive Luke Bryan said Grimeli looks a "very interesting early stage exploration project" and said the company is currently assessing approaches it has received in recent months to participate in new exploration projects in Norway. The stock trades down 21%.
Still ahead in the economic calendar is US Markit manufacturing PMI is due at 1445 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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3 Nov 2014 11:39
