German shares closed the first trading day of October downbeat, with the blue-chip DAX index down 0.80%, amid the largest contraction seen in the country's factory sector in a year. The HCOB Germany Manufacturing PMI was down to a 12-month low of 40.6 in September from 42.4 in August. In September, output, new orders, employment and stocks in the manufacturing sector of Europe's top economy fell at faster rates. S&P Global and Hamburg Commercial Bank data also showed that the deterioration of the eurozone's manufacturing sector worsened in September.
The HCOB Eurozone Manufacturing PMI dropped to a nine-month low of 45 from 45.8 in the previous month. "It is not just falling demand that is hitting companies - they are also dealing with supply-chain headaches. This combination is pretty rare and, over the last 30 years, we've only really seen it during the pandemic.
Typically, when demand drops, delivery problems tend to ease up. But this time, since June, the index tracking delivery issues has been dropping alongside new orders and for the first time since February, businesses are saying they are having to wait even longer for goods than they did in the previous month.
The ongoing geopolitical tensions are obviously taking their toll here," commented Hamburg Commercial Bank Chief Economist Cyrus de la Rubia. In other economic news, provisional data from the European Union's statistical office showed the euro area annual inflation rate at 1.8% in September, compared with 2.2% in August and the consensus estimate of 1.9%.
Eurostat anticipates services to be the primary driver of inflation in September. On the corporate front, Covestro added 3.79% at closing after it entered into an investment agreement relating to its potential sale to United Arab Emirates' oil company Abu Dhabi National Oil Co., d/b/a Adnoc. If pursued, the transaction would generate 62 euros per share or 1.17 billion euros in total for shareholders of the German polymer materials manufacturer. "We are convinced that the agreement reached today with Adnoc International is in the best interest of Covestro, our employees, our shareholders, and all other stakeholders.
With Adnoc International's support, we will have an even stronger foundation for sustainable growth in highly attractive sectors and can make an even greater contribution to the green transformation," said Covestro Chief Executive Officer Markus Steilemann..