European equities closed higher yesterday as strong US jobs data continued to brighten investors’ mood, but Wall Street ran into profit-taking as the market absorbed record-breaking gains.
The London market eked out a small improvement on its recent winning streak seen after the bank of England brought on heavy monetary artillery in the form of a rate cut and quantitative easing to combat the economic fallout from Brexit.
In the eurozone, Frankfurt rose 0.6% at 10,432.36, Paris managed 0.1% at 4,415.46 and London’s FTSE 100 up 0.2% at 6,809.13 points at close yesterday.
“An early rally fizzled out in afternoon trading as European markets edged out a third day of gains which began with the bank of England’s ‘sledgehammer’ monetary policy decision on Thursday,” said Jasper Lawler at CMC markets.
Friday’s bright US employment figures helped “overshadow some lacklustre Chinese trade data” published Monday, analysts at Charles Schwab noted.
Support also came from rebounding oil prices, buoyed by an announcement by Opec that it plans an informal meeting next month which may result in lower output.
US oil sector shares held up well in response even as the rest of Wall Street began to slip, with Wal-Mart shares edging lower after news of its acquisition of online retailer Jet.com as part of its efforts to counter Amazon in the booming e-commerce market.
Trading volumes were mostly thin, with analysts at Aurel BGC in Paris expecting “one of the calmest weeks of the year” with fewer corporate results and economic data, and no central bank meetings scheduled.
Airbus Group shares fell 1% to €50.48 in Paris after Britain’s Serious Fraud Office revealed on Sunday it had opened a criminal probe into the aircraft manufacturer, investigating allegations of fraud, bribery and corruption.
Airbus said it was aware of the probe and the aviation firm was working with investigators.
“Equity investors appeared comfortable with the idea of a tightening in the US’ monetary conditions,” said analyst Ipek Ozkardeskaya at trading firm London Capital Group.
“Whether or not the Fed could hike rates this year is still dependent on the data.”
The US Labour Department said the world’s biggest economy added 255,000 jobs in July, easily topping analyst forecasts for an increase of 185,000.
“Very often the US nonfarm payrolls report can dictate the tone of market trading for much of the month, and with the summer holiday season now fully upon us that may well be the case again over the coming weeks,” said Derek Halpenny, European head of markets research at bank of Tokyo-Mitsubishi UFJ.