Important developments today
1. Global equities retreat amid renewed fears of Greek default
2. U.S. factory activity stays resilient
Global equities retreat amid renewed fears of Greek default. World stock markets started the fourth quarter lower on Monday amid renewed fears about Greek sovereign default, after the country’s government admitted Sunday it won’t meet its deficit targets. The euro came under pressure as well, dropping to an eight-month low against the dollar. The news that Greece is having a difficult time reducing its debts, despite additional austerity measures, weighed harshly on investor sentiment. The Europe’s benchmark Stoxx 600 fell 1.9% on Monday, after slumping 17% in the third quarter—the biggest quarterly decline since 2008. The MSCI Asia Pacific Index plunged 2.7%, with Hong Kong’s Hang Seng Index slumping 4.9%. U.S. equities also opened lower in early trading session, but they rebounded slightly amid unexpected rebound in manufacturing and construction data.
U.S. factory activity stays resilient. In contrast to the decline in manufacturing activity in the Eurozone, US manufacturing activity continued its expansion through September. The Institute for Supply Management’s factory index rose to 51.6 in September from 50.6 the previous month. The comparable index in the eurozone (PMI) fell for the second month running to 48.5 in September from 49 in August. A reading of 50 marks the dividing line between expansion and contraction. However, with a fall in US consumer confidence, a drop in retail sales, and a slowdown in global trade, US factory activity will continue to face headwinds in the coming months. Indeed, the new orders sub-index stayed at 49.6, implying declining new orders.