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July 31, 2021
BUSINESS

European stocks end higher but concerns remain

European stocks closed higher Friday, though most of the region’s main indexes pared gains into the close despite better-than-expected U.S. labor market data, suggesting investors still need convincing that the worst of recent volatility is over, WSJ reports. “This month’s labor market report was as unexpectedly good as last month’s was unexpectedly bad. This is still not a strong labor market,” said Rob Carnell, economist at ING Bank, who still expects another round of quantitative easing to be announced at the next Federal Open Market Committee meeting in November. The benchmark Stoxx Europe 600 index closed up 0.7% at 231.99, and week-to-date it ended 2.6% higher. There has been considerable volatility this week in equities, but the move by the European Central Bank Thursday to inject liquidity into the market helped sentiment somewhat. However, concerns remain.

Indeed, after the close of European markets, ratings firm Fitch downgraded Italy to A+, outlook negative. This follows the downgrade by Moody’s late Tuesday and Standard & Poor’s downgrade last month. Also, gold fell approx. 1pc on Friday, as investors raised cash to cover margin calls amid losses in the equity markets after Fitch downgraded the credit ratings of Spain and Italy. In the U.K., credit-rating firm Moody’s downgraded 12 U.K. financial institutions, citing the belief that U.K. government support for financial institutions is less certain.

On Sunday, German Chancellor Angela Merkel and French President Nicolas Sarkozy met in Berlin to prepare for a European Union leaders summit starting Oct. 17.

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