Europe Markets

Europe stocks close lower after strong US jobs data dampens hopes of Fed cut; Deutsche Bank up 2.5%

Key Points
  • Market focus was largely attuned to U.S. nonfarm payrolls and unemployment data, which came in stronger-than-expected on Friday afternoon.
  • Nonfarm payrolls rose by 224,000 in June, outstripping early predictions of 160,000 according to a Reuters poll.
  • In corporate news, Deutsche Bank on Friday announced that investment banking chief Garth Ritchie had agreed to step down.

European stocks traded lower Friday afternoon following a stronger-than-expected U.S. nonfarm payrolls report, which weakened the likelihood that the Federal Reserve will cut interest rates at July's monetary policy meeting.

The pan-European Stoxx 600 closed provisionally 0.7% lower in the end of week session, with basic resources shedding 2% while banks and retail stocks were the only sectors trading in positive territory, each up just 0.2%.

Market focus was largely attuned to U.S. nonfarm payrolls and unemployment data, which came in stronger-than-expected on Friday afternoon. Nonfarm payrolls rose by 224,000 in June, outstripping early predictions of 160,000 according to a Reuters poll. Stocks on Wall Street fell at the open on Friday after the release.

A weaker-than-expected figure would have increased bets that the Federal Reserve will cut interest rates at its meeting on July 30 and 31. The central bank opened the door to easier monetary policy last month by stating it will "act as appropriate" to maintain the current economic expansion. However, the surprisingly strong figure weakens the Fed's case for policy easing.

Dismal German industrial orders data on Friday morning, compounding a woeful week for Europe's largest economy, provided further cause for investors to lock in. Industrial stocks were down 1.8% following the release.

In corporate news, Deutsche Bank on Friday announced that investment banking chief Garth Ritchie had agreed to step down. The long-speculated move comes as Deutsche prepares a sweeping multi-billion dollar overhaul that will see substantial cuts to its investment banking division. The German lender's shares climbed 2.49% Friday as investors reacted to the news.

Geopolitical tensions in the Middle East are also in focus after British Royal Marines seized a large Iranian oil tanker on Thursday for trying to take oil to Syria in violation of EU sanctions, evoking fury in Tehran.

Meanwhile, European Central Bank Vice President Luis de Guindos told a Spanish radio station on Thursday that the bank is keeping all monetary policy options on the table for dealing with an economic slowdown and reaching its inflation goals.

The European blue chip index's biggest loser Friday was Swedish tech giant Hexagon, which saw its shares plunge 13% after warning of a drop in second-quarter sales due to the U.S.-China trade war. The company also announced that it would be cutting 700 jobs.