European Stocks Close On Firm Note On Strong Economic Data

It turned out to be a fairly impressive first session of the second half of the year for European stocks on Thursday as upbeat economic data and rising optimism about strong recovery lifted sentiment.

Worries about the surge in Delta variant of the coronavirus infection and travel curbs in several countries limited markets‘ upside. Still several indexes in the region hit new or multi-month highs in the session.

Besides reacting to the latest batch of data from the region, investors also tracked economic reports from the U.S. and looked ahead to the crucial monthly jobs data, due on Friday.

The pan European Stoxx 600 climbed 0.62%. The U.K.’s FTSE 100 surged up 1.25%, Germany’s DAX gained 0.47% and France’s CAC 40 advanced 0.71%, while Switzerland’s SMI ended up by 0.29%.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Iceland, Ireland, Norway, Poland, Portugal, Spain and Turkey closed with strong gains.

Greece, Netherlands, Russia and Sweden ended modestly higher, while Czech Republic closed weak.

In the UK market, JD Sports Fashion climbed nearly 5.5%. Associated British Foods shares gained about 4.8% after the company said sales at its Primark fashion stores rose much more than expected in the third quarter.

Royal Dutch Shell ended nearly 3% up after the company said it plans to leave Aera, its California-based oil and gas-producing joint venture with Exxon Mobil Corp.

IAG, Compass Group, Hikma Pharmaceuticals, Melrose Industries, Fresnillo, BP, Flutter Entertainment, Aveva Group, Legal & Generale, Barclays Group, Taylor Wimpey, Lloyds Banking Group and Rolls-Royce Holdings also rose sharply.

In Germany, Lufthansa gained about 3%. Thyssenkrupp, Bayer, BASF, Munich RE, Covestro and Continental gained 1 to 2%, while Infineon Technologies declined sharply.

In the French market, Technip climbed nearly 4.5%. Societe Generale gained about 3% following a rating upgrade from Deutsche Bank. Sodexo moved up 2.3% after reporting a sharp 19% increase in third-quarter revenues.

Renault, Publicis Groupe, Unibail Rodamco, Safran, Veolia, Saint Gobain, Danone, Engie and Vinci also ended with strong gains. Essilor ended down by 1.7%.

In economic news, the unemployment rate in the euro area fell to 7.9% in May from 8.1% in the previous month, data from Eurostat showed. The rate was forecast to fall marginally to 8%.

The euro area manufacturing sector grew at a fresh survey record pace for a fourth successive month in June as demand surged with the further relaxation of containment measures, final data from IHS Markit showed.

The final manufacturing Purchasing Managers’ Index rose to 63.4 in June from 63.1 in May. The final reading was higher than the flash 63.1.

The French manufacturing sector ended the second quarter with another strong growth across output, new orders and employment. Although the manufacturing PMI fell marginally to 59.0 in June from 59.4 in May, the index signaled another substantial growth.

Germany’s manufacturing sector showed an improved performance in June, with rates of output and new order growth accelerating for the first time in three months. The headline IHS Markit/BME manufacturing PMI advanced to 65.1 in June from 66.4 in the previous month.

A report from Destatis showed Germany’s retail sales grew 4.2% month-on-month in May, in contrast to a 6.8% decrease in April. On a yearly basis, retail turnover was down 2.4%, in contrast to April’s 5.1% rise.

The UK manufacturing sector logged a strong growth in June but the pace of expansion moderated from a record high, final survey results from IHS Markit showed. The Chartered Institute of Procurement & Supply manufacturing Purchasing Managers’ Index dropped slightly to 63.9 in June from May’s record high of 65.6. The reading was below the flash estimate of 64.2.

Data from the Federal Statistical Office showed Switzerland’s consumer price inflation remained stable in June, growing 0.6% year-on-year, same as seen in May. Economists had expected inflation to rise 0.7%. The core CPI rose 0.3% yearly in June and remained unchanged from the previous month.

Another data from the same source showed showed Switzerland’s retail sales increased by 2.8% year-on-year in May. On a monthly basis, seasonally adjusted retail sales declined 1.8% in the month.