By Barbara Kollmeyer, MarketWatch
AFP via Getty Images
European stocks were headed for the strongest week in a month, as surprisingly positive U.S. jobs data helped get a briefly derailed global equity rally back on track, with strong gains across energy, banking and travel sectors.
Extending earlier gains, the Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +0.88% rose early 2% after snapping a three-session winning streak on Thursday with a loss of 0.7%. The weekly gain stands at 6.5%, which would mark the best five-day return since the week ended April 10.
The German DAX /zigman2/quotes/210597999/delayed DX:DAX +1.15% jumped 2.6% and was set to gain over 10% this week, which would mark the best weekly return since that April week. The French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +1.01% surged nearly 3% and the FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +0.76% rose 1.7%.
Driving additional gains for European stocks, the U.S. government said the economy added 2.5 million jobs in May, against expectations for the loss of 7.25 million jobs, and the unemployment rate fell to 13.3% from expectations for 19%. . April’s jobs were revised up, though, to 20.7 million from 20.5 million.
“This data, if it is a true reflection of the economy, is likely to speed up the recovery for the U.S. economy,” said Naeem Aslam, chief market analyst at AvaTrade.
Dow futures /zigman2/quotes/210407078/delayed YM00 +1.59% surged 600 points the news, having already traded up 300 points after Bloomberg News reported that White House officials may spend up to $1 trillion in the next round of economic stimulus, citing sources.
Europe’s losses on Thursday were in part driven by a downbeat growth assessment from European Central Bank President Christine Lagarde, due to the pandemic. The ECB surprised investors by boosting the size of its pandemic emergency purchase program, to €1.35 trillion ($1.52 trillion) from €750 billion, and extending its run from the end of this year at least through June 2021.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.1241% fell 0.3% to $1.1297.
A powerful rally for global equities since the March selloff has been driven by unprecedented amount of stimulus from central banks and governments to help combat the coronavirus fallout. Germany, as well, added to its own pandemic stimulus program this week.
Shares of Deutsche Lufthansa /zigman2/quotes/205496028/delayed DE:LHA -0.87% surged 6%. Stock-exchange operator Deutsche Börse said Germany’s flagship carrier will move into the MDAX index. The airline has been hit hard by a loss of traffic due to the pandemic and its supervisory board recently approved a state-aid package worth €9 billion ($10.14 billion).
But the sector was stronger thanks to a surge in shares of American Airlines /zigman2/quotes/209207041/composite AAL +6.80% , up 19% in premarket trading on Friday. The airline surged a record 41% on Thursday, after indicating it was boosting capacity amid signs travel demand keeps improving.
International Airlines Group /zigman2/quotes/208070069/delayed UK:IAG +2.02% climbed 11% and Carnival /zigman2/quotes/210414141/delayed UK:CCL +4.45% soaring 15%. The airline surged a record 41% on Thursday, after indicating it was boosting capacity amid signs travel demand keeps improving.
Shares of Total /zigman2/quotes/206172043/delayed FR:FP +0.48% /zigman2/quotes/201824152/composite TOT +1.59% , BP PLC /zigman2/quotes/207305210/composite BP +1.86% /zigman2/quotes/202286639/delayed UK:BP +0.28% and Royal Dutch Shell Group /zigman2/quotes/205095589/composite RDS.A +2.97% /zigman2/quotes/207682964/composite RDS.B +2.71% all climbed 6%. That is as crude prices /zigman2/quotes/211629951/delayed CL.1 +2.27% rallied 4%.
Oil prices rose on optimism over a possible deal to extend production cuts, with the Organization of the Petroleum Exporting Countries and its allies expected to meet on Saturday, The Wall Street Journal reported , citing delegates.