As investors digested statistics showing slower job growth in the United States, European Stocks closed a tumultuous day lower on Friday, but they still had their best week in two months as fears of increasing inflation were eased.
According to a data released by the US Labor Department, non farm payrolls expanded by 194,000 jobs last month, compared to a forecast of 500,000. The unemployment rate dropped four tenths of a percentage to 4.8 percent in September, while average hourly wages rose 0.6 percent from 0.4 percent in August. In addition, the average workweek increased by 0.2 hours to 34.8 hours. Despite the fact that the headline number was a massive miss, analysts noted the result was not that bad when adjusted for seasonal considerations.
After the report, the pan-European STOXX 600 index (.STOXX), which had dropped as much as 0.5 percent, only partially reversed its earlier losses.
“While the payroll report was less than expected, the general trend of an improved labour market remains intact,” stated Sameer Samana, senior world market analyst at Wells Fargo Investment Institute.
While positive figures may strengthen the case for the Federal Reserve to reduce its economic stimulus, many analysts believe that even a second consecutive dismal employment report will not prevent the central bank from declaring a reduction in asset purchases later this year.
“It doesn’t appear like today’s statistic comes close to the kind of frightening figure that may cause (the Fed) to change direction at the last minute,” stated Chris Beauchamp, chief market strategist at online broker IG.
Oil (.SXEP) and automobile stocks (.SXAP) led European gains, but technology stocks (.SX8P) fell 1.4 percent as rising bond yields reduced the attraction of the high-growth sector.
The STOXX 600 index gained 1% this week as investors reacted positively to news of a temporary extension of the US debt ceiling, as well as the easing of fears of an energy shortage, which had fueled inflation fears.
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With Britain due to repeal harsh COVID-19 quarantine requirements for 47 locations, UK travel stocks, including British Airways owner IAG (ICAG.L), Whitbread (WTB.L), and Ryanair (RYA.I), climbed between 0.4 percent and 1.6 percent. Grant Shapps, the transport minister, announced on Thursday that 47 destinations would be removed from the red list. Ecuador, Colombia, Venezuela, and Panama are among the seven countries that will stay.He has also loosened the regulations for nations like India, Turkey, and Ghana, allowing vaccination status to be verified and fully vaccinated newcomers to simply have to take a COVID test on day two.
Eurowag (WPS.L), a Czech haulage services company, slumped 10% in its London market debut after listing a day late and at a discount. The firm claimed it issued 113 million shares in order to generate roughly 200 million euros ($230.90 million), pricing the business at about 1 billion pounds. Although increasing bond yields and expectations of monetary policy easing have hurt market volatility, Europe’s initial public offering market enjoyed its best third quarter in a decade.
Auto stocks (.SXAP) gained 1.3 percent, bouncing back after a September selloff triggered by supply chain delays and semiconductor shortages. Know more on How to Trade Indices UK – Introduction
Daimler (DAIGn.DE) climbed 2.6 percent after UBS upgraded the stock from “neutral” to “buy” and raised the price objective to 100 euros from 79 euros.
After announcing it couldn’t guarantee its June financial estimate, Cnova NV (CNV.PA), the e-commerce unit of French retailer Casino (CASP.PA), plummeted 3.8 percent.
On the first day of a discounted rights issuance, TUI AG’s London-listed shares fell 15.5 percent.