Stocks Drop as Fears over Ukraine Trump Strong Manufacturing
Volatility has returned to the capital market as Russian troops surrounded and took over the Ukrainian peninsula of Crimea. U.S. Secretary of State John Kerry was due to travel to Kiev Monday to reiterate the US’s strong support for Ukrainian sovereignty. Economic data in the US was stronger than expected with a national purchasing manager’s survey showing strong results, while European PMI data came in weaker than expected. All three major indices closed lower, but none more than 1%.
Eurozone manufacturing PMI slipped to 53.2 in February from 54 in January, with the German print dropping but staying in growth territory. The French reading surprisingly improved but the sector contracted again. The overall survey is consistent with euro-zone industrial output growing at 1% in Q1, while GDP is set to rise 0.4-0.5%.
Personal spending increased 0.4% compared to expectations of an increase of 0.1%, while personal income increased 0.3% compared to the 0.1% increased expected by economists. On the inflation front personal expenditures increased by 0.1%, in line with economist’s expectations.
The Institute for Supply Management reported its index of national factory activity rose to 53.2 in February, up from January’s read of 51.3, which was the weakest reading since May 2013. February’s figure topped the median forecast of 52.0. January’s weakness came on a steep drop in the forward-looking new orders index. That component rebounded to 54.5 from 51.2 in January. There were some caveats to the strong report, as the production sub-index sank to 48.2 from 54.8, notching its third straight month of declines and falling below 50 for the first time since August 2012. The employment index held flat at 52.3.
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