Europe Stocks Slip off Record High as Dismal China Data Weigh

European stocks slipped off Friday’s record-high closing level, weighed down by dismal economic prints from China and uncertainty over this week’s key data readings from the US. 

The Stoxx Europe 600 Index fell 0.3% to 523.22 as of 9:30 a.m. in London, with trading volumes languishing 33% below the 30-day average as US cash markets will be shut for a public holiday on Monday. Autos and consumer goods took a hit after data showed Chinese factory activity contracted for a fourth month and a residential property slump worsened. As iron ore prices tumbled back below $100 a ton, miners including Rio Tinto Plc and Antofagasta Plc fell. 

Real estate gained, however, led by portal Rightmove Plc which surged as much as 25% on news that Australia’s REA Group Ltd. is considering a takeover offer. Also, Morgan Stanley said the property sector is now attractive, predicting share prices to rise across the board. 

The European benchmark has rallied for the past four straight weeks, the longest streak since March, with investors growing increasingly confident that the European Central Bank will lower interest rates and that the global economy is continuing to grow. 

READ: JPMorgan’s Matejka Says Stocks May Stall Even With Rate Cut

Manufacturing purchasing manager indexes for August emerged, with the euro-area final reading at 45.8, slighly above the preliminary 45.6 reading. However, the biggest piece of data due this week is Friday’s US payrolls reading which could determine whether the Federal Reserve delivers a 50 basis-point interest rate cut this month.

“If we get a rise in rates as the market realizes that the employment picture is not as dire as feared, a rise in rates could still be positive for risky assets,” said Mohit Kumar, chief economist for Europe at Jefferies International. 

Kumar also noted the effects of September seasonality, with a likely increase in the supply in government and corporate bonds. On average, September has been the worst month for the Stoxx 600 over the past 5 years.

Among other individual stock movers, industrial firm Ashtead Technology Holdings Plc slid as much as 8.2% after a hit to margins, while Kainos Group Plc shares slide as much as 14%, after the IT company predicted only a small increase in revenue for the year ending March 2025.

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