European shares subdued on jitters ahead of U.S. labor data

4:34 am Thursday, September 05th, 2024

By Shubham Batra

(Reuters) -European stocks were flat on Thursday as gains in utilities were offset by losses in miners, while investors awaited more economic data from the euro zone and the United States to gauge the outlook for global interest rates.

The pan-European STOXX 600 index was flat, with miners down as prices of most metals fell on dim demand outlook following the recent weak economic data globally, including in top consumer China. [MET/L]

“As global manufacturing continues to cook on a low flame and with a slower-than-expected recovery in China – Chemicals and Basic Resources leave a bland taste,” said strategists at Deutsche Bank Research.

Rate-sensitive sectors utilities and real estate were the top gainers with a nearly 1% rise after weak U.S. data on Wednesday bolstered the case for policy easing by the Federal Reserve.

German industrial orders rose in July by 2.9% on the previous month on a seasonally and calendar adjusted basis, versus a Reuters poll of analysts that predicted a fall of 1.5%. Germany’s benchmark DAX index was up 0.3%.

Investors will now shift focus to euro zone’s retail sales figures at 0900 GMT and U.S. labor market data around 1230 GMT that could help investors recalibrate their interest rate expectations.

The main event for the week, however, will be the nonfarm payrolls data on Friday that has kept investors on the edge as it could provide a clear direction for the markets until consumer price index (CPI) reading next week.

Markets currently assign a 60% probability of a 25-basis-point rate cut by the U.S. central bank in September, with a total easing of 109 bps expected by the end of 2024.

Among individual stocks, Associated British Foods slipped 4% to a five-month low as it expects Primark’s like-for-like sales to decrease by 0.5% in the second half of the year due to the unfavourable weather in the UK and Ireland.

Vistry surged 2.18% as the British homebuilder said it would buy back shares worth 130 million pounds ($171 million), following a 7% rise in half-year earnings, helped by resilient demand for its affordable homes.

Lanxess rose 2.3% after Morgan Stanley raised the rating on the chemicals firm’s stock to “Overweight” from “Underweight”.

Chip stocks extended their slide from the previous session with ASML Holdings falling 1.1%, tracking weakness in U.S. semiconductor stocks.

(Reporting by Shubham Batra and Johann M Cherian in Bengaluru; Editing by Rashmi Aich and Mrigank Dhaniwala)