Markets

European markets close lower with economic data in focus; Melrose shares jump 12%

Key Points
  • The pan-European Stoxx 600 provisionally ended down by 1.5%, reversing earlier gains, as almost all sectors slipped into negative territory.
  • Technology stocks led the losses, falling almost 4%.
  • U.S. Labor Department figures released Thursday showed that new filings for unemployment benefits totaled 881,000 for the week ending Aug. 29, beating the 950,000 expected in a Dow Jones poll of economists.

European markets closed lower on Thursday as investors digested key economic data from around the world.

The pan-European Stoxx 600 provisionally ended down by 1.5%, reversing earlier gains, as almost all sectors slipped into negative territory. Technology stocks led the losses, falling almost 4%.

Final euro area Markit Purchasing Managers' Index (PMI) composite readings Thursday showed that economic activity expanded by more than expected in August, coming in at 51.9 against a forecast of 51.6, with a reading above 50 representing monthly expansion.

This was lower than the 54.9 reading for July, however, as a number of European countries wrestle with resurgences in coronavirus cases. 

Germany's services PMI for August was revised sharply higher to 52.5 from a preliminary estimate of 50.8.

Global equities are receiving a boost from hopes for further U.S. stimulus and progress on a coronavirus vaccine, with 76 nations now committed to the World Health Organization's "COVAX" program to evenly distribute vaccines when they become available.

U.S. Federal Reserve policymaker Mary Daly cautioned Wednesday that trimmed federal support measures will dent the country's economic recovery, and investors are placing hopes on additional stimulus to weather the storm.

European stocks received a mixed handover from Asia Pacific, where South Korean and Japanese markets led gains while mainland Chinese shares declined. China's services sector expanded again in August, according to a private survey. The Caixin/Markit services PMI came in at 54.0, as compared to July's reading of 54.1.

Stateside, stocks fell sharply as market participants paused in the wake of a recent rally to all-time highs. Tech, the market leader since the rebound began in late March, was the biggest laggard.

New U.S. Labor Department figures released Thursday showed that new filings for unemployment benefits totaled 881,000 for the week ending Aug. 29, beating expectations of 950,000 from economists polled by Dow Jones.

Back in Europe, the EU's Brexit negotiator said Wednesday that the U.K. must address the bloc's demands on fisheries and fair competition in order to confirm new trading arrangements by the end of October deadline. 

Meanwhile, Bank of England Deputy Governor Dave Ramsden and fellow policymaker Gertjan Vlieghe on Wednesday warned that the British economy could suffer a deeper wound from the coronavirus pandemic than the Bank projected last month.

In corporate news, Commerzbank on Wednesday severed ties with auditor EY in light of the Wirecard accounting scandal, with the British accountancy giant now in the spotlight having signed off on Wirecard's books for years.

Biggest movers

In terms of individual share price action, Melrose Industries gained over 12% after reporting stronger-than-expected trading over the summer months and projecting a recovery in the aviation and automotive sectors, despite profit falling sharply for the first half.

British Airways parent IAG climbed 6% to lead a broad rally for the travel sector, with Easyjet, Tui and Lufthansa all adding more than 4%.

At the other end of the Stoxx 600, Swedish telecoms company Sinch fell 9% after the U.K.'s Competition and Markets Authority (CMA) announced an investigation into its planned acquisition of SAP's cloud communications unit.