(Bloomberg) — European stocks gained on Friday, boosted by strong earnings and as traders pulled forward Federal Reserve rate-cut expectations after data showed a slowdown in the US jobs market.
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The Stoxx 600 Index was up 0.4% by the close in London, with consumer products, construction, and technology sectors leading gains while energy, health care, and banking stocks lagged.
“Numbers are not weak enough to change the Fed‘s mind about the need for a near-term cut, but it does show signs of softening of the employment market,” said Patrick Armstrong, chief investment officer at Plurimi Wealth LLP.
The surprise scaling back in hiring by US employers was taken as an indication that the Federal Reserve will be able to start cutting rates as early as September, sending European stocks higher before paring gains to earlier levels.
Among single stocks, Credit Agricole SA gained strongly after pulling forward a target to reach annual adjusted profit of €6 billion ($6.4 billion). Meanwhile Societe Generale SA dropped after the lender said that a long-lasting drag from a bad hedging decision will continue into the second quarter.
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Novo Nordisk A/S shares also weakened after the chief executive officer of US competitor Amgen Inc. said he was “very encouraged” by early results from a study of the company’s experimental obesity drug, MariTide. Apple’s surge following an upbeat forecast and record buyback also cheered up European peers and suppliers including STMicroelectronics NV and Infineon Technologies AG.
The technology sector has been an investor darling for a long time and “the market is likely quite relieved that earnings exceeded analysts’ expectations there,” said Marija Veitmane, senior multi-asset strategist at State Street Global Markets.
In April, Europe’s benchmark index snapped a five-month winning streak, as investors worried that sticky inflation would prompt the Fed to keep interest rates higher for longer.
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–With assistance from Michael Msika.
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