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European stocks rebound after hammering of US jobs report

  • Eurozone investor sentiment picks up slightly in August, recession still likely
  • Carlsberg raises its outlook for 2022; the stock goes up
  • Siemens Energy falls on warning of deeper net loss
  • Moody’s downgrades Italy’s outlook from ‘stable’ to ‘negative’

Aug 8 (Reuters) – European stocks recorded their best day in nearly two weeks on Monday after posting falls the previous week when a strong U.S. jobs report revived bets for another aggressive rise rates by the Federal Reserve.

The pan-European STOXX 600 index (.STOXX) rose 0.8%, stabilizing after two weeks of gains on Friday.

Almost all sectors were up, with economically sensitive sectors including financials (.SXFP) and automotives (.SXAP) leading the gains.

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Later in the week, the focus will be on key inflation data from the world’s largest economy. Global stock markets were spooked on Friday after data showed a sharp rise in U.S. jobs, undermining hopes that the Fed could abandon its series of rate hikes aimed at tackling soaring inflation.

Economic surprises

After ending July with gains of over 7%, the STOXX 600 struggled this month to sustain momentum amid concerns over poor economic data, rising geopolitical tensions and fears that higher interest rates will not push the economy into a recession.

Investor sentiment in the eurozone remained essentially unchanged in August from July, with a rise too small to stave off recession fears, a survey found. Read more

“We see recession in Europe as likely even in the absence of sharp rate hikes, as widespread economic stress from an energy crisis bites… The European Central Bank and markets are underestimating the risk that the energy crisis causes a recession, and the ECB will eventually come to terms with this and rethink its rate path,” BlackRock strategists wrote in a note.

The world’s largest asset manager is underweight European equities as the war-fueled energy price shock in Ukraine puts the region at risk of stagflation, they added.

Meanwhile, European oil (.SXEP) and healthcare (.SXDP) stocks missed the broader rally, up 0.6% and flat, respectively.

Crude prices held near multi-month lows on demand concerns, while healthcare stocks came under pressure from the US Senate on Sunday passing a bill to cut drug prices, among others. Read more

Danish brewer Carlsberg rose 1.5% after raising its outlook for 2022 profit growth, saying it was able to resume operations in Ukraine and post a strong performance in Europe and Asia. Read more

Siemens Energy fell 1.0%, blaming a 200 million euro ($204 million) charge related to the shutdown of its Russian business for a higher net loss in 2022. read more

Italian stocks (.FTMIB) lagged their European counterparts after global ratings agency Moody’s downgraded the country’s outlook from “negative” to “stable” on Friday. Read more

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Reporting by Shreyashi Sanyal and Anisha Sircar in Bengaluru; Editing by Sriraj Kalluvila and Shinjini Ganguli

Our standards: The Thomson Reuters Trust Principles.

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