Source: Sharecast
The pan-regional Stoxx 600 index fell 0.16% to 547 points. Germany’s DAX bucked the trend and rallied to be 0.04% higher, while France’s CAC 40 was down 0.24 % after the Organisation for Economic Co-operation and Development cut its growth forecasts for the global economy to 2.9% this year and the next. It had previously forecast growth of 3.1% and 3% respectively.
It warned that the slowdown would likely hit the US, Canada, Mexico and China hardest.
Growth forecasts for US were projected to tumble to just 1.6% this year from a prior forecast of 2.2% and 2.8% in 2024. It sees the world's biggest economy expanding by only 1.5% next year.
"It’s only a small revision but it’s still enough to cause investors some indigestion as they consume their morning news. The downgrade weighed on the mining sector as the market fears it could mean reduced demand for commodities, and therefore a potential knock to the price of metals and minerals," said AJ Bell investment director Russ Mould.
“The 90-day pause on tariffs has just over a month before expiration, meaning the pressure is on countries to do deals with the Trump administration. Reports suggest that Trump wants best offers on trade negotiations by Wednesday, perhaps to avoid any last-minute rush or stalemate situations.”
In other economic news, eurozone inflation fell to 1.9% in May, down from 2.2% in April according to a flash estimate from statistics body Eurostat. The decline was driven by cheaper energy prices – energy prices fell by 3.6% across the eurozone, having been flat in April.
Elsewhere, China’s manufacturing sector unexpectedly contracted in May, according to data released on Tuesday.
The Caixin/S&P Global manufacturing purchasing managers’ index, which focuses on smaller companies, fell to 48.3 from 50.4 in April, missing expectations for a reading of 50.7. It marked the lowest level since September 2022.
Meanwhile eyes are still on US tariffs after President Donald Trump on Friday said he would double levies on steel imports to 50% on June 4.
“June started on a bearish note, as renewed trade tensions and mixed economic data dominated the headlines. First, tensions between the US and China notched up another level, with both countries accusing each other of violating agreements and implementing discriminatory measures. It’s now uncertain whether Trump and (China President) Xi will meet to talk,” said Swissquote Bank analyst Ipek Ozkardeskaya.
“Then, not much progress has been made on the European front — aside from growing frustration in Brussels after the US doubled steel and aluminium tariffs to 50%, effective mid-June.”
“Meanwhile, tensions between the EU and China are also rising, with the EU deciding not to purchase medical equipment from China, citing ‘reciprocity of purchasing’. If Europeans start playing by Trump’s rules, the next four years could turn into a global nightmare. At least everyone will get a slice of the horror pie—apparently, that’s what global politicians are aiming for.”
In equity news, Julius Baer fell as the Swiss bank said it planned to cut costs by 130 million Swiss Francs by 2028 as part of its strategic review.
Reporting by Frank Prenesti for Sharecast.com