Europe: Shares end higher after worst week in nearly four months
EUROPEAN shares eked out gains on Friday (Jul 7) as data pointing to slowing US job growth eased concerns about interest rate hikes by the Federal Reserve but did little to change the main Stoxx 600 index’s worst weekly showing in almost four months.
The Stoxx 600 rose 0.1 per cent by 4.15 pm GMT, turning positive midway through the session after data showed the US economy added the fewest jobs in 2-1/2 years in June.
However, persistently strong US wage growth pointed to still tight labour market conditions that cemented bets the Fed will resume raising interest rates, later this month.
Traders stuck to bets the Fed will raise its benchmark interest rate this month to a 5.25-5.5 per cent range, but were sceptical of further hikes beyond that.
“This doesn’t change our view that the Fed is poised to continue its hiking cycle this month,” said Candice Tse, global head of strategic advisory solutions at Goldman Sachs Asset Management.
“The US economy is still growing below potential, inflation continues to decline, but still remains above the Fed’s 2 per cent target, keeping the Fed on track for another 25 bps hike.”
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European equities took a hit this week as hawkish messages from central banks pushed up yields and drove investors to believe rates will remain high for longer, and as bleak economic readings from the euro zone and China fed concerns of a global slowdown.
The Stoxx 600 fell 3.1 per cent for the week, its worst performance since mid-March.
For the day, the chemicals sector led gains with a 1.6 per cent rise.
Sectors, including construction & materials, healthcare and travel & leisure, led falls with declines of over 4 per cent each for the week, while defensive real estate remained the sole gainer with a 0.4 per cent rise.
Earlier in the day, German industrial production fell 0.2 per cent in May compared with the previous month. Analysts polled by Reuters had predicted that output would stagnate in May.
Coca Cola HBC jumped 5.1 per cent, after it raised its 2023 profit expectation.
Clariant rose 4.9 per cent after paring losses as the company’s preliminary second-quarter results showed weaker sales and outlook for current financial year.
Top loser on the Stoxx 600, OSB Group plunged 28.8 per cent to hit its lowest since November 2020 after the British lender flagged an up to £180 million pound (S$311.7 million) hit as customers refinance their mortgages earlier than forecast.
Comments from European Central Bank President Christine Lagarde will be monitored later in the day. REUTERS
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