Europe's Stoxx 600 ends week at all-time high on earnings support, soft US jobs data

[BENGALURU] Europe’s Stoxx 600 rallied to a fourth consecutive record close on Friday (Aug 7), led by technology stocks and a largely positive slate of corporate earnings, while softer US jobs data further supported sentiment.

The pan-European Stoxx 600 closed 0.3 per cent higher, reaching a record 660.25 points and marking a fourth consecutive weekly advance.

Markets capped a busy earnings week that pushed the benchmark to multiple record highs, while expectations of a potential US-Iran agreement also supported sentiment throughout the week.

Technology shares added 1.9 per cent in the session, tracking gains from Wall Street, and were the best performing sector on the Stoxx 600 this week.

Investors parsed the US nonfarm payrolls report that showed the world’s largest economy surprisingly shed jobs last month, reducing the perceived chance of an interest rate hike by the US Federal Reserve in September.

“I don’t think there’s one reason behind this rally in European markets. All today’s payrolls number has done is basically given it an extra boost,” said Michael Hewson, senior market analyst at iForex.

Healthcare stocks rose 1.2 per cent. Genmab jumped 6.5 per cent after the cancer drugmaker reported higher first half revenue and raised its full-year outlook.

Novo Nordisk and Abivax gained 3.9 per cent and 3.5 per cent, respectively.

Companies in the Stoxx 600 are now expected to report second quarter earnings growth of more than 22 per cent, the strongest since the third quarter of 2022, according to data compiled by LSEG.

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“Overall, the reporting season reinforces the view that European corporate fundamentals remain healthy, particularly among higher-quality investment-grade issuers,” said Gordon Kerr, European macro strategist at KBRA.

“However, markets are becoming increasingly selective as elevated valuations leave less room for disappointment.”

Kingspan surged 17.8 per cent after results, topping the Stoxx 600 gainers, as the building materials firm raised its profit forecast on booming data centre demand.

Czech defence firm CSG fell 8 per cent despite reporting first half revenue above expectations.

Miners added 0.3 per cent, lifted by firmer prices of precious and base metals. Insurers dipped 0.2 per cent after Munich Re slid 1.4 per cent despite reporting a 6 per cent rise in second quarter net profit, beating expectations of a decline.

Elsewhere, Stellantis dropped 1.7 per cent after Bernstein cut the Franco-Italian automaker’s rating to “underperform” from “market perform”.

On the geopolitical front, Iran, working with Oman, proposed banning vessels deemed hostile from the Strait of Hormuz and imposing steep fines on those breaching the rules. REUTERS