European Stocks Recoup Week’s Losses as Recession Concerns Ease

(Bloomberg) -- European equities rose on Friday to recover the week’s losses as concern that the US economy may be slipping into recession waned.

The Stoxx Europe 600 Index ended the session 0.6% higher as the real estate, health-care and travel and leisure sectors rallied, leaving the benchmark with a slight gain for the week. At its session high, the index was up 0.7% on the week, an outcome that would have seemed improbable on Monday, when stocks wrapped up a three-day slide on recession concerns. 

Worries that the US Federal Reserve has waited too long to ease policy have buffeted equity markets on both sides of the Atlantic as investors parse data for signs that the US economy could be stalling. High-flying tech stocks have been hit particularly hard as investors look for proof that the hype around artificial intelligence is translating into earnings. In Europe, banking stocks are the biggest laggards so far this month.

“We’ve seen a dead-cat bounce earlier this week and this bounce is running out of steam,” said Joachim Klement, a strategist at Panmure Liberum, adding that investors calibrating US recession risks and the outlook for tech stocks could weigh on the market. “US markets will move sideways for a while, while Europe has a chance to break out to the upside on the back of solid macro data.”

Last week, a release showing that US hiring slowed in July triggered recession concerns and prompted traders to price in a more aggressive rate cut from the Fed in September. Since then, equities have rebounded, helped by an encouraging US initial jobless report Thursday that eased worries that the jobs market is cooling.

Some strategists are remaining sanguine. Bank of America Corp.’s Michael Hartnett said that the turbulence in global financial markets has yet to reach proportions that would signal worries about a hard economic landing.

“If you look at the fundamentals, the market is reacting to a confluence of bits of bad news in the last few weeks, but actually the risk is that markets become hyper sensitive to single data points just because of how sensitive everyone has become,” Ben Seager-Scott, chief investment officer at Forvis Mazars, said by phone. “Markets are volatile, economic data are volatile, so I think it helps inject just a little bit of healthy skepticism back in.”

Friday’s biggest single-stock movers included Italian insurer Assicurazioni Generali SpA, which fell after its earnings missed expectations as claims from storms and flooding in Europe weighed. Lotus Bakeries NV closed at a record high following an upbeat outlook for its Biscoff brand. And Hargreaves Lansdown Plc gained after a consortium including CVC and ADIA agreed to buy the investment manager in a £5.4 billion ($6.9 billion) deal. 

For more on equity markets:

You want more news on this market? Click here for a curated First Word channel of actionable news from Bloomberg and select sources. It can be customized to your preferences by clicking into Actions on the toolbar or hitting the HELP key for assistance. To subscribe to a daily list of European analyst rating changes, click here.

--With assistance from Michael Msika, Sagarika Jaisinghani and Cristin Flanagan.

©2024 Bloomberg L.P.