Markets

European markets close higher after U.S. jobs data surprises

Key Points
  • The U.S. unemployment rate for May came in at 13.3%, much lower than the 19.5% expected by economists.
  • The ECB on Thursday announced a 600 billion euro ($672 billion) expansion of its Pandemic Emergency Purchase Programme (PEPP), a larger increase than analysts had been expecting.

European markets provisionally closed higher on Friday after the latest U.S. jobs report revealed the country defied projections to add 2.5 million jobs in May, the largest monthly increase ever.

Britain's FTSE 100 ended up over 2.3%, Germany's DAX gained 3.4% and France's CAC 40 jumped 3.6%, as most major bourses held in positive territory. Markets in Denmark were closed for the Constitution Day holiday.

The U.S. non-farm payrolls report published Friday afternoon stunned markets, with economists having expected a further fall in payrolls of 8.33 million. This would have taken the unemployment rate to 19.5%, but instead it sits at 13.3% despite nationwide shutdowns as a result of the coronavirus pandemic.

The ECB on Thursday announced a 600 billion euro ($672 billion) expansion of its Pandemic Emergency Purchase Programme (PEPP), a larger increase than analysts had been expecting. 

The new injection brings the central bank's total bond buying to 1.35 trillion euros as it looks to weather what ECB President Christine Lagarde called an "unprecedented contraction" in the euro zone economy.

On Wall Street, all the major stock indexes rose sharply following the surprisingly strong jobs data.

Investors were also monitoring progress on Covid-19 vaccines as economies look to reopen following months of lockdowns necessitated by the pandemic. British drugmaker AstraZeneca has doubled its manufacturing capabilities for a potential vaccine to 2 billion doses with distribution expected to begin this fall.

A survey out of the U.K. on Friday showed consumer confidence in late May falling to its lowest level since the global financial crisis, while retail sales plummeted 18% across the month.

German factory orders fell 25.8% in May, according to figures released Friday morning, a more drastic contraction than analysts expected as Europe's largest economy continued to be hammered by industrial shutdowns as a result of the pandemic.

Biggest movers

British business process outsourcing firm Capita was Friday's biggest gainer, jumping over 20%, closely followed by an 18% gain for cruise operator Carnival.

On the back foot was Italian biotechnology firm DiaSorin, which plunged nearly 7%.