- Traders see less than 50% chance of Fed hike this year
- Stoxx 600 still cap biggest weekly drop since February
European shares pared their worst intraday losses after weaker-than-forecast U.S. payrolls pushed back the likelihood of a Federal Reserve rate increase.
The Stoxx Europe 600 Index dropped 0.4 percent at the close of trading. Shares trimmed a slide of as much as 1.3 percent after data showed U.S. employers in April added the fewest number of workers in seven months. Traders are now pricing in little chance of higher borrowing costs in June, and less than even odds of a hike in the next nine months. They saw a 58 percent probability of a December boost as recently as last week.
“We’re almost back to that Goldilocks scenario where the growth isn’t so hot that you have to put rates up dramatically and also not so weak that you have to add a lot of stimulus.,” said Patrick Spencer, equities vice chairman at Robert W. Baird & Co. in London. “We’ve had a hell of a run since February, so it’s hardly surprising we’re getting a bit of profit taking now. Concerns about global growth are coming back.”
Stocks have fallen since reaching a three-month high in April as investors questioned the extent of the recovery amid declining profits, disappointing economic data and concern about the efficacy of central-bank stimulus. The Stoxx 600 fell 2.9 percent this week, its biggest loss since the worst of the slump in February, as worries resurfaced about global-growth prospects.
Among shares active on corporate news, Man Group Plc tumbled 8.6 percent after Citigroup Inc. downgraded the hedge fund firm to sell from buy, citing disappointing performance from its AHL unit, and slashed its profit estimates for this year and the next. Banca Monte dei Paschi di Siena SpA gained 2.4 percent after its quarterly profit beat estimates.
Miners of precious metals advanced as investors sought haven assets. Randgold Resources Ltd. and Fresnillo Plc jumped more than 6 percent.