Europe stocks rise as markets digest US jobs data amid Fed rate hike debate
European stocks inched slightly higher Monday as markets digested the latest U.S. jobs data which pared expectations that the U.S. Federal Reserve would hike interest rates in September.
The pan-European STOXX 600 was up 0.19 percent, with the index earlier climbing to its highest level since late-April.
European markets followed their Asia counterparts higher on Monday as investors react to the latest U.S. jobs data. U.S. financial markets are closed today for the U.S. Labor Day holiday.
Data released Friday showed that U.S. nonfarm payrolls increased by 151,000 in August, bucking economists’ expectations for a gain of 180,000. The unemployment rate ticked down to 4.8 percent and wage growth slowed. August is a notoriously tricky month for payrolls, however, and the number could see a sizeable revision.
The nonfarm payrolls report was eagerly watched by the Fed and markets as a bellwether on the state of the U.S. economy. The lower-than-expected number has now pushed back expectations for a rate hike when the Fed meets on September 20-21.
In other data news, Markit’s final composite Purchasing Managers’ Index for the euro zone in August was 52.9, below a flash estimate of 53.3 and July’s figure of 53.2. August’s reading was the lowest since January 2015. But it’s still above the 50 mark that divides growth from contraction.
Royal Bank of Scotland and Lloyds shares dropped after Deutsche Bank cut its price target for both companies’ stock.
Italy’s Unicredit was trading flat after chief executive Jean-Pierre Mustier saying he was not worried that a capital-raising for the lender would clash with a planned cash call for Banca Monte dei Paschi di Siena (BMPS).
And shares of BMPS were lower after La Stampa reported that Italian Prime Minister Matteo Renzi has spoken with Angela Merkel about using the European Stability Mechanism to give funds to the troubled lender if its planned capital raise doesn’t work.
Telefonica announces IPO of mast unit
Elsewhere, Marks and Spencer will cut 500 jobs at its head office this week, according to a Sky News report on Saturday, sending shares in the British retailer mildly lower.
Spain’s Telefonica was trading higher after it announced its intention to float for a partial listing of its Telxius masts unit and said that it will decide on a partial sale or initial public offering of its U.K. O2 unit in the next few weeks.
Altice said it would exchange its shares for the outstanding 22.25 percent of shares of France’s SFR that it does not already own, in order to simplify its ownership structure. Shares in Altice rallied on the back of the news.
Hugo Boss was one of the worst-performing stocks on the STOXX 600 after UBS cut its price target for the stock and put a “sell” rating on it.
In other news, Chinese President Xi Jinping has called for greater policy co-ordination from world leaders as he hosts a meeting of the powerful Group of 20 countries (G-20) in Hangzhou.
Meanwhile, Angela Merkel has suffered a sobering defeat in regional elections this weekend. The right-wing Alternative for Germany (AfD) party was the second most popular party in regional elections in Mecklenburg-Western Pomerania, beating the German Chancellor’s CDU party for the first time in a state vote. The center-left Social Democrat party (SPD) came first, however.
Source: CNBC
