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What to Watch: EU economies near stagnant, Intu shares crash, M&S woes

Tom Belger
Finance and policy reporter
Eurozone economies are close to standstill. Photo: Arne Immanuel Bänsch/picture alliance via Getty Images

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Eurozone economies close to stagnation

Economies across Europe remain close to stagnation and at risk of contracting in the fourth quarter, according to a widely watched business survey.

A key index of private sector activity across the eurozone painted a downbeat picture, holding down stock markets after gains in recent days on hopes of a US-China breakthrough on trade.

Business expectations among managers were at their second lowest in five years.

Private sector output increased on last month, coming in at a headline figure of 50.6 on the IHS Markit composite purchasing managers’ index (PMI). Figures below 50 show output declining and above 50 illustrate growth.

Another index showed new orders declining for a second month in a row, but at 49.6 it marked an improvement on September’s 48.7.

But the dominant services sector showed slight growth, up from 51.6 to 52.2, and figures for several leading economies were better than expected.

IHS Markit said the PMI figures were consistent with a 0.1% rise in GDP, below the 0.2% forecast by in a Reuters poll of economists last month.

Intu shares crash as it floats raising more equity

The owner of Manchester’s Trafford Centre saw its share price plummet 13% on Wednesday, with investors fleeing as it floated the idea of issuing more shares.

The CEO of shopping centre owner Intu Properties (INTU.L) said plans being considered to fix its balance sheet included “disposing of assets, where we are in the advanced stages of selling two of our Spanish assets, through to raising equity.”

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Matthew Roberts’ comments and a forecast of 9% decline in like-for-like net rental income sent shares spiralling.

Intu had a net debt of £4.8 billion at the end of 2018.

M&S shares rise despite profits crashing 17.1%

Profits and revenue have slumped at Marks & Spencer after poor sales in its clothing and home departments.

The retail giant (MKS.L) said pre-tax profits were down 17.1% in the first half of the financial year, sliding to £176.5m. Revenue dropped 2.1% to £4.86bn.

It comes in spite of renewed efforts to turn around the iconic business, which has seen its shares tumble over the past year and slipped out of the FTSE 100 (FTSE) index of Britain’s biggest companies.

But shares still rose 2.3% in morning trading in London, as growth in food sales, apparent confidence in its turnaround plans and low expectations boosted its value.

European stocks tread water

European stock markets tread water on Wednesday morning, as PMI figures showing near-stagnation across the eurozone dampened recent growing optimism over a US-China trade truce.

Britain’s FTSE (FTSE) fell 0.2%, the German DAX (^GDAXI) was 0.1% lower, the Euro Stoxx 50 (^STOXX50E) was flat and the French CAC 40 (^FCHI) was 0.1% higher.

Asian stocks were mixed overnight, with Japan’s Nikkei (^N225) 0.2% higher, but China’s Shanghai Composite index (000001.SS) down 0.4% and the Hong Kong Hang Seng Index (^HSI) flat.

What to expect in the US

The mood on trade has taken US shares to record highs in recent days, but the Dow Jones futures (YM=F) and S&P 500 futures (ES=F) Nasdaq futures (NQ=F) were all trading flat just before the open.