European Stocks Climb as U.S. Jobs Report Beats Estimates
European stocks advanced to a four- month high, rebounding from yesterday’s biggest slide in more than a week, as a report showed the U.S. economy added more jobs in July than forecast.
Allianz SE (ALV) and Axa SA (CS) gained 5.7 percent and 5.1 percent, respectively, after Europe’s biggest insurers reported profit that beat analysts’ estimates. Banks rose as Intesa Sanpaolo SpA (ISP) and Natixis SA posted better-than-projected quarterly earnings. Siemens AG (SIE) gained 6.2 percent after Europe’s largest engineering company said it will repurchase as much as 3 billion euros ($3.7 billion) in stock by the end of the year.
The Stoxx Europe 600 Index (SXXP) climbed 2.4 percent to 265.58 at the close in London, its highest level since April 2. The gauge climbed 2.2 percent this week, even though the European Central Bank and the Federal Reserve failed to deliver immediate measures to stimulate the slowing global economy. The equity benchmark completed its ninth week of gains, the longest stretch since January 2006.
“It may well have been a win-win situation, where a lower number would’ve signaled potential Fed easing and the beat signaling that the U.S. economy isn’t in such a bad state as some believe,” said Serge Berger, a Zurich-based trader at Blue Oak Advisors LLC. “It’s possible investors are waiting for next week to make decisions based on the numbers. But still, a beat by 60,000 is better than a miss by 60,000.”
In the U.S., the Labor Department report showed that American employers added 163,000 workers last month. That exceeded the 100,000 median estimate of economists surveyed by Bloomberg News. Monthly jobs growth had slowed to an average of 75,000 in the quarter through June from 226,000 in the previous three months. The unemployment rate climbed to 8.3 percent in July, the release said.
National benchmark indexes gained in every western-European market except in Iceland. France’s CAC 40 advanced 4.4 percent and the U.K.’s FTSE 100 increased 2.2 percent. Germany’s DAX rose 3.9 percent. Italy’s FTSE MIB and Spain’s IBEX 35 jumped 6.3 percent and 6 percent, respectively.
The Stoxx 600 declined 1.3 percent yesterday after European Central Bank President Mario Draghi failed to reassure investors that he will do everything to preserve the euro.
Draghi yesterday announced that the ECB has a plan to re- enter bond markets and said new purchases in the secondary market would only complement buying by the European Union’s rescue fund in the primary market, to which strict conditionality is attached.
Allianz rose 5.7 percent to 83.07 euros as second-quarter profit climbed more than analysts had predicted after earnings increased at its life and health business. Net income of 1.23 billion euros topped the 1.15 billion-euro average estimate of 13 analysts surveyed by Bloomberg.
Axa climbed 5.1 percent to 10.19 euros as first-half operating profit, which excludes capital gains, one-off charges and asset-valuation swings, rose to 2.3 billion euros, helped by rising revenue from health and property-and-casualty insurance. That exceeded the 2.15 billion-euro average estimate.
Intesa Sanpaolo surged 13 percent to 1.06 euros after Italy’s second-biggest bank posted second-quarter net income of 470 million euros. That beat the average analyst estimate of 323 million euros.
Natixis (KN) jumped 8.8 percent to 2.06 euros. The investment- banking and asset-management unit of Groupe BPCE reported second-quarter net income of 394 million euros, exceeding the 347 million-euro average estimate of five analysts.
BNP Paribas SA (BNP) and Societe Generale SA (GLE), France’s largest lenders, soared 8.7 percent to 32 euros and 10 percent to 18.53 euros, respectively. A gauge of European banks contributed the most to the Stoxx 600’s advance. Deutsche Bank AG (DBK) rose 8.7 percent to 25.23 euros. UniCredit SpA (UCG), Italy’s biggest lender, rallied 8.4 percent to 2.79 euros.
Siemens climbed 6.2 percent to 72.55 euros, its biggest gain in more than two years, after the company said it will repurchase equities and cancel 33 million shares held in treasury. Siemens said it will use the buybacks to reduce capital stock, to issue shares to employees and board members and to back convertible bonds and warrants.
Inmarsat Plc (ISAT) rallied 11 percent to 537 pence, its biggest gain since May 2009. The company posted second-quarter sales of $329 million, beating the $310 million average estimate of three analysts compiled by Bloomberg.
International Consolidated Airlines Group SA (IAG) slid 5.2 percent to 151 pence after reporting a second-quarter operating loss of 42 million euros, wider than the 35.6 million-euro analyst estimate.
Givaudan SA (GIVN) plunged 3.6 percent to 920 Swiss francs, its biggest decline in almost a year, as first-half earnings before interest, taxes, depreciation and amortization of 428 million francs ($441 million) missed the average analyst estimate of 451.7 million francs.
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