June 4, 2021
By Ambar Warrick and Sruthi Shankar
(Reuters) – European equities finished Friday at a record high as weak US wage data indicated less chance of an early policy tightening, while optimism about a euro zone economic recovery supported most. sectors.
The pan-European STOXX 600 index rose 0.4% to a new closing high of 452.57, after previously hitting an all-time high of 452.71. It added 0.8% for the week.
Tech stocks were up 1.2% and were the best for the day, led by Austrian chip maker AMS.
Shares in the company were up 4.4% after announcing the sale of its North American digital systems business to US-based Acquity Brands.
Global stocks rallied after data showed U.S. non-farm payrolls rose less than expected in May, leading many to scale back expectations for hawkish signals from the Federal Reserve. [MKTS/GLOB]
The Fed cited inflation and labor market health as two key factors needed to tighten policy.
The data comes ahead of Fed and European Central Bank policy meetings next week, where investors will be looking for suggestions on how to curtail their large bond buying programs.
Both banks are expected to leave the policy unchanged.
“It is too early for the ECB to even begin hinting at any form of monetary tightening, even with improving economic growth,” analysts from BCA Research wrote in a statement. “While primary inflation surpassed the central bank’s 2% target in May, core inflation only rose to 0.9%.”
However, recent European data has shown that the economy is heating up rapidly following last year’s COVID-induced lull.
The dovish outlook on lending rates weighed on government bond yields, which in turn saw European bank stocks fall 0.9%.
The heavily banking Spanish benchmark also fell by 0.6%.
European auto stocks were the best this week, adding more than 5% as positive sales and production data from major US automakers Ford and General Motors boosted the industry.
Shares of IAG, Wizz Air and easyJet, which own British Airways, fell between 0.9% and 3.3% after Britain removed Portugal from its green list of quarantine-free travel destinations and added seven countries, including Egypt and Sri Lanka, to its “red list” requiring hotel quarantine upon return to England.
Ryanair slipped 0.8% even though its chief executive predicted unrestricted movement between Europe and Britain from July onwards.
French media giant Vivendi, which owns Universal Music Group, slid 0.3% after billionaire William Ackman’s early earnings on Pershing Square Tontine was in talks to buy 10% of the music label for about $ 4 billion.
(Reporting by Sruthi Shankar in Bengaluru; editing by Sriraj Kalluvila, Kirsten Donovan)