ROME: European stock markets on Friday snapped back after firm losses fueled by a disappointing U.S. jobs report.
Investors turned their attention to the potential benefits of a weak labor market in the world’s largest economy, helping reignite buying appetite.
Tony Cross, market analyst at Trustnet Direct, said in a note that this cloud has a silver lining, as the lackluster U.S. data probably pushes a interest-rate hike by the Federal Reserve into 2016.
“The short term interpretation here is that this is good news for equities,” he said.
The Stoxx Europe 600 index SXXP, +0.47% rose 0.5% to close at 347.86, after trading as low as 343.21 earlier in the day. For the week, the pan-European benchmark closed 0.4% lower.
The brief weakness came after the monthly labor-market report from the U.S. revealed that fewer jobs than expected were created in September. The readings for August and July were revised lower, further adding to the notion that the U.S. jobs market isn’t as healthy as people thought.
Investors had been looking at whether the data would strengthen the case for the Fed’s case to raise interest rates for the first time in a decade by the end of the year. At its September meeting, the Fed raised concerns about the potential impact from slower growth in emerging markets and volatile commodity prices as it decided to keep rates at record lows.
“It certainly buys more time for emerging markets to brace themselves for the impact, but for now this is merely kicking the can down the road. The specter of rising interest rates and depreciating currencies making dollar-denominated debts unserviceable certainly hasn’t disappeared,” Cross added.
The dollar DXY, -0.19% slumped against all other major currencies after the data, sending the euro EURUSD, +0.1518% to as high as $1.1320, the highest it has been all week.
Other indexes: All major benchmarks drastically trimmed gains or turned negative after the payrolls report, but also recovered most of the lost territory late in the session.
