Europe: Shares end at 7-month high, best week since March
EUROPEAN shares closed at seven-month highs on Friday (Jan 6), boosted by miners and oil stocks, while data pointing to a moderation in US jobs growth helped calm nerves over the Federal Reserve’s rate-hike trajectory.
The continent-wide Stoxx 600 index closed 1.2 per cent higher, its highest level since May. For the week, it clocked gains of 4.6 per cent, best performance in more than nine months.
The European basic resources sector jumped 2.5 per cent, leading the sectoral advance as China-exposed miners rallied amid higher copper prices. Energy stocks gained 1.8 per cent, boosted by rising oil prices.
European shares initially struggled for direction in the early hours but gained momentum after data from the US showed nonfarm payrolls rose by 223,000 jobs in December, less than the previous month’s data, while a 0.3 per cent rise in average earnings was smaller than expected and also lower than the previous month.
“Today’s payrolls report was nirvana for the bulls,” said David Russell, vice president of market intelligence at TradeStation Group.
“The Fed’s latest worry has been the wage-price spiral, but this report shows just the opposite... We could be looking right now at a soft landing.”
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Economic data in Europe also boosted sentiment, with retail sales in Germany rising in November, adding to a slew of positive numbers this week that have indicated a milder-than-expected recession and an easing of price pressures in some countries.
Separately, eurozone economic sentiment improved in December for the first time since the start of the war in Ukraine, with more optimism across all sectors of the economy and a sharp drop in inflation expectations.
“The fall in inflation and improvement in economic sentiment in December suggest that the euro zone’s case of stagflation is not as acute as feared a few months ago,” said Andrew Kenningham, chief Europe economist at Capital Economics.
Rate-sensitive technology stocks, which were lower earlier in the day, ended 1.8 per cent higher amid a hefty falls in major euro zone bond yields.
Healthcare stocks rose 0.8 per cent, with Roche jumping 0.9 per cent after the Swiss pharmaceutical company said the US Food and Drug Administration had granted priority review to its bispecific antibody Glofitamab.
Chrysler parent Stellantis NV fell 0.7 per cent after chief executive officer Carlos Tavares warned of more auto plant closures.
Shell rose 1.7 per cent after the oil major said earnings from its natural gas trading operations were likely to have risen significantly in the fourth quarter of last year, despite a sharp output drop due to plant outages. REUTERS
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