European stocks were lifted by strong U.S. jobs data on Friday, as markets shook off losses tied to comments by Federal Reserve Chair Jerome Powell, who said the central bank wasn’t ready to stem rising long-term bond yields.
The Stoxx Europe 600 XX:SXXP pared losses to trade flat at 412.15 and was up 1.8% on the week. The German DAX DX:DAX slipped 0.2% and the French CAC 40 FR:PX1 was down 0.1%, while the FTSE 100 UK:UKX rose 0.5%, helped by a strong pound GBPUSD, as the dollar DXY strengthened. The euro EURUSD also fell.
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U.S. stocks DJIA SPX COMP opened higher following Thursday’s technology-led rout, as February jobs data came in stronger than expected, with a gain of 379,00 jobs. Bonds remained under pressure. The yield on the 10-year Treasury note BX:TMUBMUSD10Y shot up to 1.60% after the employment data.
The yield for the German 10-year BX:TMUBMUSD10Y bund was last up 2 basis points to -0.286%, a level not seen since roughly last June.
Earlier losses in Europe and Thursday’s U.S. rout came after Powell said a disorderly move in the bond market would be concerning, but didn’t suggest that the central bank was alarmed yet, in comments made at The Wall Street Journal Jobs Summit.
Investors are worried bond yields will keep climbing amid his apparent lack of concern and, in turn, pressure stocks. “The markets wanted hints as to what the central bank would do if the situation worsens, and when that didn’t materialize, equities took a hit,” said Connor Campbell, financial analyst at Spreadex, in a note to clients. “
In Europe, German manufacturing orders rose by a better-than-expected 1.4% in January, following a revised 2.2% drop in December.
As for European stocks on the move, commodities-related shares rose, with those for Royal Dutch Shell UK:RDSA RDS and those for BP BP UK:BP more than 2% up. Those gains came as crude futures CL00 BRN00 climbed over 2%.
U.S. prices posted their highest finish since 2019 on Thursday, after the Organization of the Petroleum Exporting Countries and its allies said they would rollover current production cuts to end-April.
Airlines were dropping, with shares of Deutsche Lufthansa XE:LHA, International Consolidated Airlines UK:IAG, which operates British Airways and other carriers, and Ryanair RYAAY UK:RYA down over 3% each.
The pharmaceutical sector was weak, with heavily weighted Roche Holding CH:ROG a standout decliner, dropping more than 2%, and shares of Novo Nordisk NVO fell 2%.
Dassault Aviation FR:AM shares fell 3%, after the French aircraft manufacturer said profit and revenue fell in 2020 as the aviation industry continues to struggle under the weight of the COVID-19 pandemic. Dassault did say it expects higher sales in 2021. Shares of rival Airbus FR:AIR fell by roughly the same.
Shares of London Stock Exchange UK:LSEG tumbled 12%. The exchange operator said 2020 pretax profit rose 5.2% on the back of higher revenue, and declared an increased dividend.
Citi analyst Andrew Coombs downgraded shares to neutral, citing disappointing cost guidance and concerns “we may have to wait until 2026 to reach the desired 50% Ebitda [earnings before interest taxation depreciation and amortization] this margin target (ex recoveries).”
