MW: European stocks set for weekly loss with key U.S. jobs report ahead
European stocks fell Friday, setting up for a weekly loss, as investors braced for a key U.S. payrolls report that may give clues to what’s next for interest rates in the world’s biggest economy.
The Stoxx Europe 600 SXXP, -2.00% lost 1.7 to 356.02, led by declines among financial SXFP, -2.37% , oil and gas SXEP, -2.47% and mining shares SXPR, -2.51% .
The index was on track for a 2% fall for the week, which would mark its second loss in three weeks.
In Frankfurt, the DAX 30 DAX, -2.13% dropped 1.8% to 10,133.70. In Paris, the CAC 40 PX1, -2.19% was down 1.7% at 4,573.44.
The Stoxx 600’s pullback is washing away Thursday’s gain that was spurred by remarks from Mario Draghi, president of the European Central Bank. He said the bank is willing to act again if more stimulus is needed for the eurozone economy. Read: Dovish Draghi signals ECB willing to do more QE.
Bank stocks FX7, -2.58% , which overall climbed Thursday, were giving back gains on Friday.
“So far [quantitative easing] has had a limited impact on the sector’s relative performance and valuation, but we think that the benefits of the ECB’s purchase program for European banks outweigh the negatives”, said Credit Suisse in a note Friday in which it backed its overweight rating on the European banking sector.
Jobs jolt? : Investors are turning their attention to the highly anticipated U.S. jobs report for August. Economists polled by MarketWatch expect a net gain of 213,000 new jobs. The report comes before the U.S. Federal Reserve meets later this month to decide what’s next for ultra-low interest rates, which have in part contributed to Wall Street’s six-year bull run.
The euro EURUSD, +0.0809% traded at $1.1137 ahead of the jobs report, up from $1.1129 late Thursday in New York.
“Another reading above 200,000 would suggest that the U.S. labor market is still gathering momentum despite the recent turmoil in China and the collapse in equity markets worldwide,” said Marshall Gittler, head of global FX strategy at IronFX Global, in a note.
The report is due at 1:30 p.m. London time, or 8:30 a.m. Eastern Time. Read: What to look for Friday in the August payrolls data
Elsewhere in equities, Spain’s IBEX 35 IBEX, -1.93% gave up 1.5% to 9,893.30, and the U.K.’s FTSE 100 UKX, -1.75% lost 1.6% to 6,095.77.
Movers: Kering SA KER, -4.67% shares dropped 4% after Goldman Sachs downgraded Gucci’s parent company to sell from neutral, saying in part the Gucci brand remains at risk from its “over-expanded store network, similar to other luxury brands,” such as Prada.
Next PLC NXT, -3.68% fell 3.3% after the British apparel retailer’s rating was cut to underperform from neutral at Exane BNP Paribas.
Stock in Delta Lloyd NV DL, +0.96% climbed 2.8% after ING raised the Dutch insurer’s rating to buy from hold.
German manufacturing misses: Germany manufacturing orders dropped 1.4% in July from the previous month, the economics ministry said Friday. That missed expectations of economists who expected, on average, a decline of 0.6%. Foreign orders slid after a sharp increase in June.
