European stocks rose on Monday, but trading volumes were damped down by the closure of US markets following Independence Day on Sunday.
The region-wide Stoxx 600 was up 0.4 per cent, led by financials and energy groups, after falls in early trading. France’s Cac 40 rose by 0.3 per cent, while Germany’s Dax was up 0.1 per cent.
The FTSE 100 climbed 0.6 per cent after opening flat, also led by financials and energy groups, with companies such as Lloyds Banking Group, Anglo American and Glencore all seeing prices rise.
The non-farm payrolls data on Friday showed that the US labour market had added 850,000 new jobs in June, well above economists’ expectations and far higher than the revised 583,000 figure for May.
“After the labour report in the US, I think we have a bit of time to spend to dig deeper into the data,” said Luca Paolini, chief strategist at Pictet Asset Management.
“The real driver which can change the dynamic of the market is not peaking GDP momentum . . . it’s the peak in earnings momentum,” Paolini said. “I suspect [the second-quarter] earnings season will be pretty strong,” he added.
The strong evidence that the world’s largest economy was emerging quickly from the coronavirus crisis drove US stocks to close at fresh all-time highs on Friday.
The recovery is also gaining pace in Europe. Eurozone growth has hit a 15-year high, according to data from IHS Markit released on Monday. The Eurozone Composite PMI rose to 59.5 in June, compared with 57.1 in May, reflecting strength in both manufacturing and service sectors.
Bond yields, which move inversely to price, rose across Europe. Germany’s benchmark 10-year Bunds were up 0.02 percentage points at minus 0.210 per cent, while the UK’s 10-year gilts were up by 0.01 percentage points to 0.717 per cent.
Investors would be watching for economic signals on the direction of the recovery from the US this week, Paolini added. Further strong weekly jobs numbers could increase pressure on the US central bank to consider winding down its policies that have supported the economy through the pandemic.
“We will have the minutes of the Federal Reserve [on Wednesday]. People will try to see if anything in that can shift the Fed in unpredictable ways,” he said.
Oil prices remained high despite the failure of Friday’s talks by the Opec club of oil-producing nations and its partners to reach an agreement over output. Brent crude, the global benchmark, was flat at $76.22 a barrel on Monday. The global US benchmark, West Texas Intermediate, was up 0.1 per cent, at $75.23 a barrel.