European Markets Struggle After U.S. Jobs Data Release.

European stocks struggled off the back of last week’s U.S. jobs data release. Indeed, major European indexes plunged as the U.S. job market continues to run hot, with private payrolls exceeding expectations in June. This bearish trend was further underpinned by the release of hawkish minutes from the Fed’s June meeting and numbers from China that point to softening growth in the second quarter.

China is a major export market for Europe’s biggest companies. The Caixin Manufacturing Purchasing Manufacturers Index fell to 50.5 in June - versus 50.9 in May – although this figure still remains slightly higher than the market’s expectation of 50.2. It is worth noting that some analysts expect an additional stimulus in response to the weak data seen in recent months.

Of additional note, despite inflation slipping more than expected in June, core inflation (inflation excluding energy and food prices) rose to 5.4% far from the 2.2% target of the ECB. This figure had previously eased to 5.3% in May down from 5.6% in April.

Against this backdrop, the STOXX 600 lost 3.09% over the course of the week although the DAX, the CAC, and the MIB recovered part of their losses on Friday.

Aggregated data shows that the developed Eurozone ETF segment was down by 3.13% over the week.

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