- U.S. companies added 151,000 jobs in August; July revised up
- Germany’s DAX Index comes close to erasing annual drop
European equities broke out of their lull, surging to their highest prices since April after U.S. data signaled the labor market is holding steady.
The Stoxx Europe 600 Index rallied 2 percent, the most since June 29, with the advance gathering pace after the report. U.S. payrolls climbed by 151,000 last month, following an upwardly-revised gain of 275,000 in July. While the August number missed forecasts, the jobless rate remained at 4.9 percent.
The numbers helped ease speculation that the Federal Reserve might increase borrowing costs as soon as this month, sending all western-European markets flying higher in a broad-based rally that lifted shares of all industries. The Stoxx 600 took its weekly gain to 2 percent, the most since July, with the volume of shares trading on Friday 22 percent greater than the 30-day average.
“Bulls like me have been avenged,” said Guillermo Hernandez Sampere, head of trading at MPPM EK in Eppstein, Germany. His firm oversees $260 million. “The Fed won’t do anything, and the figures were good enough to calm down the nervous investors that believed in a strong slowdown. Anything the Fed does strengthens the dollar and weakens the euro, which is good for Draghi’s strategy. All the shorties have to cover their positions before the weekend -- the U.S. market is closed for three days, which is a long period for short-term investors.”
Bets for an Fed hike in September slipped to 32 percent from 34 percent before the jobs data. Chair Janet Yellen said last week that policy tightening would depend on the degree that data “continues to confirm” the outlook. December is the first month with better-than-even odds of a Fed move.
European equities came out of their torpor, rising for a second week after the rebound following the Brexit vote stalled amid seasonally-low volume, uncertainty over U.S. monetary policy, mixed economic data and oscillating oil prices. After hovering around its 200-day moving average for most of August, the Stoxx 600 closed above it for a sixth straight day, the longest stretch in a year. It also breached above its 10-day moving average.
Consumer-related companies and utilities led the gains in Europe on Friday, with Germany’s RWE AG and Dutch Unilever up more than 4 percent. Drugmakers rebounded after falling to their lowest prices since June. Miners climbed with commodities, while energy producers rallied the most in two months. Banks posted the best surge among industry groups this week, gaining 6.1 percent for their best performance since July.
The rebound in drugmakers and utilities pushed the U.K.’s FTSE 100 Index and France’s CAC 40 Index up more than 2.2 percent, the most among major markets in the region. The British gauge snapped three days of losses that took it to the lowest in almost a month. The Swiss Market Index gained 1.9 percent, while Germany’s DAX Index added 1.4 percent, coming within 0.6 percent of erasing its annual drop.
Among the 53 stocks in the Stoxx 600 that fell:
- Rocket Internet SE slid 7.7 percent after the German startup investor announced a first-half loss.
- SBM Offshore NV tumbled 11 percent after a Brazilian prosecutor failed to ratify a leniency agreement related to a bribery case concerning Petroleo Brasileiro SA.
- McCarthy & Stone Plc plummeted 12 percent after the builder of retirement homes said the U.K.’s referendum and the Bank of England’s subsequent changes to monetary policy could affect its ability to reach its target for annual volume growth.
- Adidas AG lost 1.6 percent after Callaway Golf Co.’s chief executive officer said it won’t bid for the German company’s golf division.