European shares rebound after Friday’s US jobs data hammering

European shares rose on Monday, lifted by cyclical and growth stocks, after clocking falls in the previous week when a strong US jobs report rekindled bets of another aggressive rate hike by the Federal Reserve.

The pan-European Stoxx 600 index added 0.5%, steadying after snapping two weeks of gains on Friday.

Economically-sensitive sectors including miners, financial services and autos led the gains on Monday. Growth-orientated technology stocks advanced 1.2%.

Focus shifts to a key inflation data from the world’s biggest economy later in the week. Global stock markets were spooked on Friday after data showed a large increase in US employment, denting hopes that the Fed might let up in its series of rate hikes aimed at taming surging inflation.

After ending July with gains of over 7%, the Stoxx 600 has struggled this month to extend the momentum on worries over dour economic data, rising geopolitical tensions and fears that higher interest rates could tip the economy into a recession.

“Lower savings by households are supporting consumer spending, the eventual outcome could be a soft landing but the risk remains of a slump,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

“Against this uncertain backdrop, investors should ensure a robust portfolio that can perform in various outcomes. We prefer defensives such as healthcare as well as quality income, and value stocks.”

Meanwhile, the European healthcare sector missed out the broader rally, up 0.1%, after the US Senate on Sunday passed a bill intended to lower drug prices among other things.

Other defensive stocks, including European utilities and real estate, added about 1% each.

French utility company Veolia rose 1.9% as it confirmed it would sell Suez’s UK waste business to Australia’s Macquarie Group for about €2.4bn ($2.4bn).

Siemens Energy, which supplies equipment to the power industry, fell 2.5% as it warned of a deeper-than-previously-expected net loss in 2022 from charges due to the restructuring of its business in Russia.

Richemont asked shareholders to reject a candidate from Bluebell Capital Partners as a representative of ordinary shareholders and against the person’s election to the luxury group’s board at its upcoming AGM. Shares rose 0.7%.

Italian stocks lagged their European peers after global ratings agency Moody’s cut the country’s outlook to “negative” from “stable” on Friday.

Reuters