Cyclical rally, U.S. jobs data drive European stocks to one-week high
|07/02/2020 | 12:40pm|
By Sruthi Shankar
European shares closed at a one-week high on Thursday as hopes of a COVID-19 vaccine and a better-than-expected rebound in U.S. hiring overshadowed concerns about surging coronavirus infections.
The pan-European STOXX 600 rose 2%, easing slightly from highs hit after data showed the U.S. economy created a record 4.8 million jobs in June as more restaurants and bars resumed operations.
Banks <.SX7P> were the top gainers in Europe, jumping 4.3% to mark their best day since June 5, while other cyclical sectors such automakers, chemicals <.SX4P> and insurance companies gained between 2.5% and 3.4%.
Equity markets started the second half of the year on a positive note earlier this week, as a COVID-19 vaccine developed by German biotech firm BioNTech and U.S. giant Pfizer was found to be well-tolerated in early stage human trials, while business surveys showed a slump in global manufacturing eased in June.
"The market response is likely to be positive, but inevitably tinged with growing concerns that the recovery is already losing steam," said Seema Shah, chief strategist at Principal Global Investors.
"With the closings having been reversed or paused across 40% of the U.S., July's job report may paint a much weaker story."
Raising risks of fresh lockdowns, new U.S. cases of COVID-19 jumped nearly 50,000 on Wednesday, according to a Reuters tally, marking the biggest one-day rise since the start of the pandemic.
Further adding to concerns, Britain and the European Union failed to make progress in talks on post-Brexit relations this week due to major differences, officials said.
Among individual movers, Associated British Foods gained 4.1% after saying trading in its Primark fashion stores that reopened after the lockdown has been "reassuring and encouraging".
Scandal-hit Wirecard slumped 35.4% after police and public prosecutors raided its headquarters in Munich and four properties in Germany and Austria.
Dutch construction company BAM Groep dropped 11.6% as it warned of a "significant" loss in the first half of the year.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Bernard Orr and Sriraj Kalluvila)