The European markets ended Friday’s session in the green. The markets received an early boost from the better than expected growth in Chinese exports and received further support in the afternoon from the stronger than expected U.S. jobs report for February. Banks were among the best performing stocks on Friday.
Employment in the U.S. increased by much more than anticipated in the month of February, according to a report released by the Labor Department on Friday, with the job growth pushing the unemployment rate down to a four-year low.
The Labor Department said non-farm payroll employment rose by 236,000 jobs in February compared to economist estimates for an increase of about 171,000 jobs.
While the report also showed that the job growth in January was downwardly revised to 119,000 from 157,000, the downward revision was partly offset by an upward revision in December job growth to 219,000 from 196,000.
The continued job growth pushed the unemployment rate down to 7.7 percent in February from 7.9 percent in January. Economists had expected the unemployment rate to edge down to 7.8 percent.
Chinese export growth exceeded economists’ forecasts, while imports disappointed by undershooting expectations, the latest figures released by the General Administration of Customs showed Friday.
Exports rose 21.8 percent year-on-year in February, much faster than the expected 8.1 percent increase. However, this was weaker than January’s 25 percent growth.
On the other hand, imports declined more than expected during the month, falling 15.2 percent year-on-year. Economists had forecast an 8.5 percent drop. In January, imports grew 28.8 percent.
The trade balance was in a surplus of $15.25 billion in February contrary to expectations for a deficit of $6.9 billion. In January, the surplus was $29.15 billion.
French Prime Minister Jean-Marc Ayrault said Friday that the government should find EUR 5 billion in spending cuts next year to meet its deficit target.
The government aims to find resources through implementing structural reforms and it will not involve any reduction in the number of civil servants, Ayrault said. Ministers will negotiate spending cuts in March and April. The Bank of England will likely announce additional stimulus in the near future, but the action is unlikely to do much to boost growth this year, Capital Economics UK Economist Martin Beck said Friday.
The firm noted that though the majority of monetary policy members voted in favor of further quantitative easing (QE) in February – an option which has been justified by the recent disappointing manufacturing and construction surveys – the improvement in service sector activity and a robust retail survey signal that the economy is not quite weak enough to justify more QE, or other forms of monetary easing.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 1.34 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.83 percent.
The DAX of Germany climbed by 0.59 percent and the CAC 40 of France advanced by 1.22 percent. The FTSE 100 of the U.K. rose by 0.69 percent and the SMI of Switzerland gained 0.47 percent.
In Frankfurt, Siemens increased by 1.29 percent. Citigroup upgraded the stock to its ”Focus List.”
Infineon Technologies gained 5.63 percent, after Goldman Sachs added the stock to its Conviction Buy list.
ThyssenKrupp surged by 6.40 percent, after its supervisory board chairman, Gerhard Cromme, announced that he will step down from his post at the end of the month.
Deutsche Bank and Commerzbank rose by 1.81 percent and 2.11 percent respectively.
In Paris, Renault ended the session with a 5.53 percent gain. Peugeot also climbed by 4.50 percent.
France Telecom climbed by 3.66 percent, after Exane BNP Paribas upgraded the stock to “Outperform” from “Neutral.”
BNP Paribas finished higher by 4.10 percent. Societe Generale advanced by 4.70 percent and Credit Agricole added 1.14 percent.
Lagardere increased by 4.82 percent, after posting an annual profit.
In London, Schroders rose by 2.01 percent. UBS upgraded its rating on the stock to ”Neutral” from ”Sell.”
HSBC Holdings climbed by 2.62 percent and Lloyds Banking Group added 0.42 percent. Barclays gained 2.94 percent and Royal Bank of Scotland advanced by 0.99 percent.
Credit Suisse downgraded the mining sector to ”Underweight.” Rio Tinto dropped by 0.71 percent, Kazakhmys declined by 2.65 percent and Fresnillo finished down by 1.53 percent.
Centrica fell by 1.10 percent, after JPMorgan downgraded the stock to ”Neutral” from ”Overweight.”
Vodafone increased by 3.22 percent, after it announced a 10-year deal with the New Zealand Police.
Marks & Spencer decreased by 1.04 percent, after Credit Suisse initiated coverage on the stock with an “Underperform” rating.
Aggreko declined by 3.09 percent, after Goldman Sachs removed the stock from its Conviction Buy list.
Halma climbed by 3.30 percent, after Barclays upgraded the stock
Credit Suisse gained 3.88 percent in Zurich. UBS upgraded the stock to ”Buy” from ”Neutral.”
Nomura downgraded Clariant to ”Reduce” from ”Buy.” The stock declined by 2.39 percent.
Germany’s industrial production stagnated in January as the contraction in manufacturing and energy output was offset by a recovery in the construction sector. Industrial output remained flat in January from a month ago, when it rose by revised 0.6 percent, figures released by the Federal Ministry of Economics and Technology showed Friday. Output was forecast to grow by 0.4 percent.
French business sentiment improved to 96 in February from 95 in January, survey data from the Bank of France showed Friday. The reading came in line with economists’ expectations.
Production in the British construction sector decreased for the thirteenth consecutive month in January, but at a notably slower pace compared to the previous month, preliminary data released by the Office for National Statistics showed Friday.
The volume of construction, on a non-seasonally adjusted basis, declined 7.9 percent on an annual basis in January, slower than the 14.5 percent contraction seen in December and the 8.1 percent decrease recorded in November.
Job placements in the United Kingdom increased at a slower pace in February, data from a survey by the Recruitment and Employment Confederation (REC) and KPMG showed Friday.
Permanent job placements increased at the slowest pace in four months in February, while temporary recruitment rose at the weakest pace in six months. The rate of growth eased as higher private sector demand for staff was offset by a decline in the public sector.
Britons’ inflation expectations for the year ahead rose to 3.6 percent in March from 3.5 percent in November, the latest quarterly survey from Bank of England/GfK NOP showed Friday.
According to the Inflation Attitudes Survey, inflation will then fall to 3.4 percent. Inflation expectations for a longer-term, say in five years time, came in at 3.6 percent, the same rate as seen in the previous survey period.
Wholesale inventories in the U.S. increased by much more than expected in the month of January, according to a report released by the Commerce Department on Friday, although the report also showed a notable drop in wholesale sales.
The report said wholesale inventories surged up by 1.2 percent in January after rising by a revised 0.1 percent in December. Economists had expected inventories to increase by about 0.4 percent compared to the 0.1 percent drop originally reported for the previous month.
by RTT Staff Writer
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