PMIs drive Eurozone market outperformance

European markets have outperformed the FTSE, which is trading just 20 points higher, with early gains fading.

• Strong PMIs lead mainland Europe higher

• Iraq throws OPEC deal in doubt

• AT&T merger on borrowed time after political warnings

An impressive set of PMI survey readings out of the eurozone has ensured that mainland European markets are outperforming their UK counterparts, with early FTSE gains fading. Particularly impressive data came from the manufacturing sector which seems to have staged an unlikely comeback, with eurozone, French and German manufacturing PMIs all hitting 2016 highs. Coming at a time when the euro is tumbling back to a seven-month low, it is clear that producers are enjoying somewhat of a renaissance following a period of uncertainty.

Iraq has thrown the latest spanner in the works for the chances of the OPEC production cut, with OPEC’s second-largest producer claiming that their fight against Islamic militants should make them exempt from any cuts. With Russia and now Iraq both backing down from previous plans to reduce output, it seems this unlikely deal has already begun unravelling less than two months after its announcement.

The recently announced AT&T and Time Warner merger is facing significant headwinds if it is ever going to be completed, with politicians from both sides of the spectrum clamouring to speak out against the move. AT&T is already the third largest cable provider, so there is a feeling that this kind of consolidation can only be negative for consumers in both prices and range of content. A Senate hearing in November will be the next hurdle to overcome if this deal is to become a reality.

Ahead of the open we expect the Dow Jones to open 80 points higher, at 18,226.