World stocks sink after manufacturing data shows China’s factories failing to fire

TOKYO—Global stocks fell Thursday after another slump in oil prices added to doubts about the strength of global demand and China’s manufacturing output grew at the slowest pace in five months.

Keeping score

European markets were lower in morning trade. France’s CAC-40 was down 0.5 per cent to 4,085.07 and Germany’s DAX shed 0.4 per cent to 8,906.64. Britain’s FTSE100 lost 0.7 per cent to 6,353.03. But futures indicated gains for Wall Street. Dow futures rose 0.2 per cent to 16,461 and S&P 500 futures gained 0.2 per cent to 1,929.60.

China economy

A preliminary reading of China’s massive manufacturing industry for October provided mixed messages. HSBC’s factory purchasing managers index rose to 50.4 in October from 50.2 the previous month (figures above 50 indicate expansion) but the output sub-index slipped to a five month low. “While the manufacturing sector likely stabilized in October, the economy continues to show signs of insufficient effective demand,” HSBC said.

The quote

“Investors seemed to have lost their mojo,” said Betty Lam, sales trader at CMC Markets in Sydney. “Volumes remain unseasonably skinny and China data failed to inspire traders to step off the sidelines.”

Energy

Oil prices extended losses after the U.S Energy Department reported an increase in oil inventories that was far larger than expected. Benchmark U.S. crude was down 28 cents at $80.24 a barrel in electronic trading on the New York Mercantile Exchange after falling $1.97 on Wednesday. The slide in energy prices in the past two weeks has raised doubts about the strength of the global economy but also offers some upside in Asia where many countries are reliant on imported fuel.

Asia’s day

In Asia, Japan’s Nikkei 225 closed down 0.4 per cent at 15,138.96 while Hong Kong’s Hang Seng fell 0.5 per cent 23,281.50. Seoul’s Kospi shed 0.3 per cent to 1,931.65 and Australia’s S&P/ASX 200 dropped less than 0.1 per cent to 5,383.10. China’s Shanghai Composite was down 1.0 per cent at 2,302.42.

Big earnings

Later in the global day, major U.S. companies such as Microsoft, 3M, Amazon.com, Caterpillar and United Continental will be releasing earnings reports. Asian companies, including major Japanese names such as Toyota Motor Corp., are releasing their reports later in the month.

Currencies

The euro was little changed at $1.2644 from $1.2646 late Wednesday. The dollar rose slightly to 107.20 yen from 107.16 yen.