Europe: Shares stuck below 2-year highs as US data dashes rate optimism
EUROPEAN shares were little changed on Friday (Feb 2), as gains from upbeat corporate earnings offset hotter-than-expected US jobs data that quashed hopes of an imminent rate cut by the US Federal Reserve.
The pan-European Stoxx 600 was flat on the day, hovering near two-year highs hit earlier in the week. Germany’s DAX 40 index hit a record high during the session and closed up 0.4 per cent.
Danske Bank was the best performer on the European benchmark index, jumping 8.1 per cent after the Danish lender reported fourth-quarter results and announced a share buyback programme.
French steel tubes maker Vallourec climbed 3.1 per cent after it said it expects 2023 results to exceed its prior outlook.
Mercedes-Benz shares were among the top performers on the DAX, up 2 per cent after reporting preliminary annual free cash flow for its industrial business above market expectations.
Technology stocks added 0.3 per cent, tracking overnight gains in Meta Platforms and Amazon.com after they posted better-than-expected quarterly results.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Meanwhile, US job growth accelerated in January and wages increased by the most in nearly two years, signs of persistent strength in the labour market that could make it difficult for the Fed to start cutting interest rates in May as currently envisaged by financial markets.
“The US economy continues firing on all cylinders despite the sharpest monetary policy tightening in 40 years,” said Ronald Temple, chief market strategist at Lazard.
“The combination of 353,000 new jobs in January, upward revisions to prior months’ job creation, and strong average hourly earnings growth will push the Fed to wait for more good data, before cutting.”
A raft of positive earnings in Europe nudged the benchmark index to its second week of gains, though latest LSEG data still estimates Stoxx 600 companies’ earnings decreasing by 8.5 per cent year on year.
Policymakers pushing back the timing of rate cuts tempered sentiment, with money markets pricing in a cut of around 135 basis points by the European Central Bank this year, down from around 150 basis points earlier this week.
Electrolux shares closed 0.7 per cent higher, reversing earlier losses triggered by the Swedish appliances maker saying it expects consumer sentiment to remain weak in early 2024.
Oil and gas shares fell 1.4 per cent, dragged lower by a 1.5 per cent drop for BP after the oil giant shut its biggest hydrocarbon refinery in the Midwest US region. REUTERS
Share with us your feedback on BT's products and services
