Europe: Cyclical rally, US jobs data drive stocks to 1-week high

[BENGALURU] European shares closed at a one-week high on Thursday as hopes of a Covid-19 vaccine and a better-than-expected rebound in US hiring overshadowed concerns about surging coronavirus infections.

The pan-European Stoxx 600 rose 2 per cent, easing slightly from highs hit after data showed the US economy created a record 4.8 million jobs in June as more restaurants and bars resumed operations.

Banks were the top gainers in Europe, jumping 4.3 per cent to mark their best day since June 5, while other cyclical sectors such automakers, chemicals and insurance companies gained between 2.5 per cent and 3.4 per cent.

Equity markets started the second half of the year on a positive note earlier this week, as a Covid-19 vaccine developed by German biotech firm BioNTech and US giant Pfizer was found to be well-tolerated in early stage human trials, while business surveys showed a slump in global manufacturing eased in June.

"The market response is likely to be positive, but inevitably tinged with growing concerns that the recovery is already losing steam," said Seema Shah, chief strategist at Principal Global Investors.

"With the closings having been reversed or paused across 40 per cent of the US, July's job report may paint a much weaker story."

Raising risks of fresh lockdowns, new US cases of Covid-19 jumped nearly 50,000 on Wednesday, according to a Reuters tally, marking the biggest one-day rise since the start of the pandemic.

Further adding to concerns, Britain and the European Union failed to make progress in talks on post-Brexit relations this week due to major differences, officials said.

Among individual movers, Associated British Foods gained 4.1 per cent after saying trading in its Primark fashion stores that reopened after the lockdown has been "reassuring and encouraging".

Scandal-hit Wirecard slumped 35.4 per cent after police and public prosecutors raided its headquarters in Munich and four properties in Germany and Austria.

Dutch construction company BAM Groep dropped 11.6 per cent as it warned of a "significant" loss in the first half of the year.

REUTERS