LONDON: The opening of European markets on Monday was relatively uneventful, as economic data from France and Germany suggested a further slowdown in corporate activity, raising concerns for the two largest economies in the region.

In early trading, the pan-European Stoxx 600 index saw a slight uptick of 0.06%, driven by gains in the banking, telecom, oil and gas, and technology sectors. However, the market quickly stabilized following the release of purchasing managers' index (PMI) data from Germany and France.

After the preliminary composite PMI data showed a significant drop in business activity for September, particularly in manufacturing and services, France's CAC 40 index fell by more than 0.5%. The PMI score decreased from 53.1 in August to 47.4, marking an eight-month low and falling short of the expected 50.6. A PMI reading below 50 indicates a contraction.

Germany's flash composite PMI also fell to 47.2 in September from 48.4 in August, reaching a seven-month low and reflecting the country's sluggish economic performance. Cyrus de la Rubia, head economist at Hamburg Commercial Bank (HCOB), stated that these figures suggest a "technical recession" in the German economy. He added that the current forecast anticipates a 0.2% decline in GDP for the third quarter, following a 0.1% contraction in the second quarter. Nevertheless, there remains hope that rising earnings and decreasing inflation could boost domestic demand in the final quarter of the year.

Exchange Movements
Following the German government's announcement over the weekend that it would not sell additional shares in Commerzbank, the nation's second-largest lender, the bank's stock price dropped by 5%. This decision comes amid growing speculation that the government is against a potential acquisition, especially since Italian bank UniCredit recently became Commerzbank's second-largest shareholder by acquiring a 9% stake.
Hugo Boss, a German retailer, experienced a 5.3% drop in its stock price after Bank of America Global Research downgraded its recommendation from "buy" to "underperform," citing declining demand in China as the main reason. In its July trade report, Hugo Boss had already warned about tough market conditions in both China and the U.K., prompting a revision of its sales forecast.

In contrast, shares of British property website Rightmove surged 2.3% after news broke that it had rejected a sweeter merger proposal from Australian real estate listing company REA Group.

Broader Sentiment in the Market
After the U.S. Federal Reserve implemented its first interest rate cut in four years, global markets continued to show a sense of optimism. Investors in the Asia-Pacific region responded positively to recent comments from China, Japan, and the United States regarding monetary policy. The blue-chip index reached a new high last week due to the rate cut, while Dow futures remained nearly unchanged on Sunday night.