Leading stock indexes of Europe on Friday, rising ahead of a key report on the US labor market.
On the eve the U.S. indices DJIA, S&P 500 and the Nasdaq Composite closed at new historical highs after the release of the report of the ADP on the increase in the number of jobs in the US private sector in may by 253 thousand against the forecast of increase of 185 thousand These data fuelled expectations the publication of positive report Non-farm payrolls (NFP), which will be released today at 15:30 GMT.
Analysts predict an increase in the number of new jobs outside agricultural sector in U.S. in may for 180 thousand, and the preservation of unemployment at around 4.4%. In the case of strong data will increase the probability of a rate hike in the fed funds rate at the June meeting of the Federal open market Committee (FOMC). Previously, the increase in the key rate was seen by markets as a negative factor because the increase in the cost of borrowings. However, at the moment investors see a rate hike as a positive sign of improvement in the U.S. economy.
In addition, the field of view of the investors was the decision of the President of the United States Donald trump out of the Paris climate agreement, which obliges the US by 2025 to reduce greenhouse gas emissions by 26 – 28% compared to 2005 levels. According to trump, the conditions of the Paris agreement would cost US loss of 2.7 million jobs, so do not correspond to the economic interests of America.
As noted by Russian analyst Dmitry Lukyanov, the climate is a “sacred story” for Europeans, “in the field of environment the EU is traditionally considered a leader and takes her as his “soft power” so that “failure to persuade the American allies to join undermines the credibility of Europe as an important player.”
However by 14:10 GMT the pan-European Stoxx Europe 600 rose 0.8%, compared with yesterday’s closing level against the background of rising British FTSE-100 index at 0.35%, the German DAX down 1.6%, France’s CAC 40 down 0.9%.
The FTSE-100 index today, has updated the historical maximum due to the weakening of the British pound against the U.S. dollar. The current GBP/USD dropped 30 points from the morning’s levels, reaching 1.2850, which is associated with the publication of the results of the latest population surveys, reporting the latest decline of the rating of the ruling Conservative party ahead of the 8 June parliamentary elections in the UK.
Among the leaders increasing in Europe were shares of the banking sector whose index rose 1.5% on expectations of increase in fed funds rate in June.
Shares of Spanish Bank Banco Popular Espanol gained 1.8 percent after yesterday falling to 18% provoked by Reuters that European regulators warned the Bank about the need to minimize operations if he can’t find investors or buyers. Later, the European Agency for the oversight of banks reported that “never did” such warnings.
Banco Popular Espanol is the fourth largest Bank in Spain. At the end of the first quarter, the Bank recorded a loss of $ 137 million Euro loss last year amounted to 3.5 billion euros due to the devaluation of the value of toxic mortgage assets on its balance sheet. To date Banco Popular Espanol (headquartered in Madrid) is the weakest Bank in Spain needs to attract capital, having failed to restore position after the crisis in the real estate market of the country.
The index of European oil and gas sector to the current time fell by 0.4% amid falling oil prices by more than 2%. The decision of Donald trump to get out of the Paris climate agreement heightened expectations of further expansion of oil production in the US that hurt the world’s leading exporters of oil to balance the market and stabilise prices. Investors ignored the message Reuters that at a recent OPEC summit, it was decided on the reduction of oil production by countries outside the cartel, in addition to 1.5%.
The current cost of the August contract for Brent crude oil declined 2.4% to $ 49.45 per barrel.
The fall in oil prices increased yesterday evening, despite the message of the energy information administration (EIA) of U.S. Department of energy that last week the volume of commercial crude oil reserves in the vaults of the United States (excluding strategic reserves) decreased by 6.4 million barrels. to 509.9 million barrels. Gasoline inventories fell by 2.9 million barrels. to 237.0 million barrels., distillate inventories (including diesel and heating oil) increased by 0.4 million barrels. to 146.7 million barrels.
Oil stocks in the Strategic reserve (SPR) fell by 1.0 million barrels. to 686.7 million barrels. Commercial stocks of crude oil storage in Cushing fell by 0.8 million barrels. and amounted to 64.8 million barrels.
Prepared using materials MarketWatch and CNBC.