What’s happening: European stocks surged on Thursday to close at a one-week high following stronger-than-expected US jobs data and hopes of a covid-19 vaccine.
What happened: Positive news of a coronavirus vaccine trial lifted market sentiment earlier in the session. The momentum was driven further by the US reporting a higher-than-expected addition of 4.8 million jobs in June.
US stocks also rallied earlier in the session but pared most of the gains, as investors worried about a rise in daily infection numbers. US markets will remain closed today for the Independence Day extended weekend.
Why it matters: Global equity markets began the second half of the year on a stronger note after investor sentiment was buoyed by news of encouraging early-stage human trial results from a covid-19 vaccine being developed by Germany biotech firm BioNTech and US pharma company Pfizer.
The positive momentum garnered pace on Thursday after a strong US jobs report, showing the addition of 4.8 million jobs in June, versus expectations of 3 million. The country’s unemployment rate also declined to 11.1% in June, from 13.3% in May, also surpassing estimates. The recent numbers were released on the heels of an unexpected addition of 2.5 million jobs in May.
Meanwhile, covid-19 cases continued to surge in various countries, with the US recording a record daily addition of 50,000 infections on Wednesday.
Markets also shrugged of Eurozone’s jobs data, which showed an increase in the unemployment rate to 7.4% in May, from 7.3% in April. The ECB also released its GDP projections of an 8.7% contraction in 2020 and growth of 5.2% for 2021.
Investor sentiment was not dampened by the lack of progress in the talks between the UK and the EU on their post-Brexit relationship.
The pan-European STOXX 600 closed higher by 2%, easing slightly from the session highs. Banking stocks were the top performers, rising 4.3% to record their best session since June 5, while all sectors closed in the positive zone.
London’s FTSE 100 gained 1.3% on Thursday, while the German DAX 30 index and French CAC 40 closed higher by 2.8% and 2.5%, respectively.
Shares of Associated British Foods climbed more than 4% on Thursday, despite the British conglomerate reporting a 39% decline in its third-quarter revenue. The company disclosed that all its Primark outlets are now open and said it expects the brand to record an adjusted operating profit between £300 million and £350 million in the full year.
DS Smith’s stock plummeted around 7% on Thursday after the company reported a decline in sales to industrial customers and cancelled its dividend.
What to watch: With US markets closed today, investors will focus on reports from the Eurozone, with services and composite PMIs data due for release today. The final reading of IHS Markit Eurozone services PMI is expected to rise to 47.3 in June, form May’s reading of 30.5. Analysts expect the composite PMI to surge to 47.5 in June, from 31.9 in May.