Europe close: Stocks at record highs despite weak US jobs data
European shares continued pushing higher on Friday, boosted by strong US markets, an upbeat outlook from sportswear maker Adidas and reports that UK aerospace engineer Meggitt could be a takeover target.
Boosting stocks on Wall Street ironically was a much weaker-than-expected reading on US non-farm payrolls for the month of April of 266,000 (consensus: 950,000).
Against that backdrop, the pan-European Stoxx 600 index rose 0.89% to a new record high of 444.93.
Germany's Dax meanwhile climbed 1.34% to 15,399.65, alongside a 0.86% rise for Spain's Ibex 35 to 9,059.2.
"When repeated Fed messages about making no changes to monetary policy fail to calm market fears about tapering, a good miss on non-farms payroll day will do the trick," said IG chief market analyst at IG.
"Today's 'huge miss' on the headline NFP figure, and the downgrade to last month's blowout figure, contributed to a general relaxation of nerves regarding any changes to Fed policy. Risk assets took off, the dollar fell, and gold built on its strong rally in yesterday's session."
Boosting the Dax was stock in Adidas and Siemens as it also raised its net income guidance for 2021.
Optimism was boosted further by official data that showed German companies increased exports for the eleventh month in a row in March, with growth coming in at 1.2%, twice the rate forecast by economists.
"European markets are looking to close out the week in positive fashion, with the FTSE 100 overcoming the 7100 mark for the first time in 14 months. US markets helped lay the ground for today’s European gains, with a welcome decline in jobless claims helping to lift spirits ahead of today’s jobs report," said IG analyst Joshua Mahony.
"Doubts over whether last month’s payrolls figure of 916k was merely a temporary response to Joe Biden’s $1.9 trillion stimulus package will be answered today, with markets looking for another lofty number. Rising ADP payrolls and continued declines in the jobless claims figure does provide the basis for a possible push towards the one-million mark for today’s non-farm payroll number.
In equity news Meggitt shares surged almost 8% following a report that US-based Woodward could be looking to buy the London-listed aerospace engineer.
According to Dealreporter, Woodward is working with an investment bank as it considers potential deals and Meggitt is in the frame.
Shares in German sportswear company Adidas soared as the company raised its 2021 sales outlook, saying it expects strong demand for new products despite ongoing lockdowns in Europe, supply chain challenges and political tensions.
Adidas said it now expects sales to grow at a high-teens percentage rate in 2021, compared to the forecast it gave in March for growth of a mid to high teens rate, with a jump of around 50% expected in the second quarter.
French mall owner Klepierre erased early losses triggered by the company cutting its 2021 cashflow forecast.
British Airways owner IAG advanced even after it reported a first-quarter operating loss of €1.06bn and pulled full-year guidance as the Covid pandemic continued to batter the airline industry.