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Worse economic data put European stocks under pressure

After a week of above-average volatility, the end of the sale comes. This puts the European DAX index at its opening price from the beginning of the week. The reason for the nervousness is the economic data of the PMI from the euro area, which in most cases turned out worse than expected and somewhat reduced the optimism that prevailed in the markets. So far, extended lockdowns are taking a toll on soft economic data, which predicts a longer economic recovery.


The mood among managers is deteriorating again

PMI's purchasing manager data was released in a number of eurozone countries this morning. The data has been eagerly awaited by investors who are curious about the impact of the latest social restrictions. For the euro area as a whole, the comprehensive survey, which includes production and services, showed a value of 47.5 points, which is just below the forecast and at the same time below 49.1 points from December. France fared worse than expected with a score of 47 points, compared to the expected 49. Germany managed to exceed expectations with a value of 50.8, which was still less than 52 points from the previous month. The United Kingdom performed worst of all, recording 40.6 points for the compound PMI, which was below expectations at 45.5 points.

Hard data can end up being worse than expected

he data showed how the economy is doing, struggling with the proliferation of lockdowns in early 2021. The spread of the virus in Europe and new restrictions point to a further decline from December figures, although production shows better numbers than services, which is symptomatic for the whole pandemic. Reading PMI above 50 points indicates expansion in the sector, on the contrary, below 50 points we are already talking about a correction. At the same time, the fact that the numbers will be accompanied by gradually tough economic data is relatively dangerous, which is something that could put stock markets in Europe under greater selling pressure.

The release of the data immediately negatively affected developments in European stock indices and the British pound. The German stock index DAX reached the levels of Monday's open and thus wiped out all gains from that week. The British pound also came under pressure due to worse numbers, while the euro stays at higher levels and consolidates yesterday's gains. However, the sentiment is also negative in the United States today, but the bigger picture has not changed significantly, which may give hope for a reverse reversal and a lower purchase price.