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StockBeat: Stronger Ifo Report Can't Stop Markets Sliding

By Geoffrey Smith

Investing.com -- Confidence is a relative concept.

Weak business surveys out of Europe triggered the global rout in stock markets on Friday, and the wave of negativity was still going strong after completing its circuit around the world on Monday morning until German research institute Ifo announced its business climate report for March.

The closely-watched index rose by more than expected to 99.6 from last month's four-year low, with both the current conditions and expectations sub-indexes beating expectations. That caused a sharp, but apparently only brief, reversal across the region's markets.

By 05:15 AM ET (09:15 GMT), the benchmark Euro Stoxx 600 was down 2.28 points, or 0.6% at 373.74, while Germany's Dax was down 0.1% and France's CAC 40 was down 0.5%.

Concerns about a U.S. recession are starting to build after short-term dollar interest rates rose above 10-year bond yields during Friday’s sell-off. While that is often cited as a reliable indicator of a coming recession, plenty of financial professionals take it with a large pinch of salt.


Among the few stocks bucking the negative trend before the Ifo release was Fiat Chrysler (NYSE:FCAU), which was reported by The Wall Street Journal as being the subject of a takeover approach from France's Peugeot (PA:PEUP). The Italian company reportedly rejected the approach. Peugeot, which has rapidly turned around General Motors (NYSE:GM)' struggling European brands, indicated earlier this year it wants to break into the U.S. market.

The one domestic story capable of generating positive news to stop the trend – Brexit – signally failed to generate anything of the kind over the weekend.

A mass demonstration in London on Saturday appears unlikely to achieve its goal of a second referendum, given that the current government is resolutely opposed to one. U.K. Prime Minister Theresa May is meeting with her cabinet Monday morning in London, against a backdrop of reports that they will pressure her to step down. May wrote to lawmakers at the weekend that she would only bring her twice-defeated Withdrawal Agreement back for a third vote if it commanded enough support, which senior Conservative party figures said isn't the case.

The FTSE 100 was down 0.3%.

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