Employment Data In The US ‘Hits’ The European Stock Markets

Stock markets in Europe end the week with a bad taste in their mouths. Sales have been imposed this Friday in the final stretch of the day. The reason? The employment figures in the United States last month , which have remained below expectations and, therefore, increase uncertainty about the withdrawal of stimulus (or tapering ) by the Fed . In Spain, the Ibex 35 ends the week losing 8,900 points and with a fall of 0.65% compared to last Friday. Today’s fall was 1.31%, the hardest in Europe with the tourism sector falling by as much as 3%.

Investors have had this session with an intense ‘macro’ agenda. Throughout the morning, the PMI indices for August of the main economies of the euro zone ( Germany , France , Italy and Spain ) and of the region as a whole were known, showing the slowdown in the economic recovery last month . The slowdown has also occurred in the US , according to the ISM. Also, a disappointing July retail sales data was released in the euro zone.

However, the focus has been on the US labor market figures, released shortly before the opening of Wall Street. The numbers have been worse than anticipated: the largest economy on the planet created only 243,000 jobs last year (up from 665,000 expected).

This slowdown in the recovery of North American jobs comes “after an excellent month of July ,” recalls Ben Laidler, global markets strategist at eToro.

Uncertainty about tapering
“The US employment report raises questions about the speed of the economic recovery ,” adds Laidler in his comment.

The recovery of employment is a key aspect for the Federal Reserve (Fed), the North American central bank, to make way for the withdrawal of stimuli to the economy (a process known as tapering ). The president of the institution, Jerome Powell, anticipated last week that it would begin this year . However, doubts among experts increase with today’s data.

“Any chance of the Fed cutting its spending in September is likely to be eliminated.”

“Along with the resurgence of covid, any chance of the Fed cutting its spending in September is likely to be eliminated, but November still looks good ,” says James Knightley, chief international economist at ING Economics.

The Ibex 35 has gotten the worst of it. The selective has conceded a fall of 1.31% to 8,863.6 points . The tourism sector and banks have suffered the blow very hard, with decreases of up to 3%. The Delta strain of the coronavirus is causing more concern in the US than in Europe and the data confirms that it is making a dent. The great derivative of the data is whether it is going to disrupt the Fed’s tapering plans. For now, banks in Spain are down 2%, thinking that the withdrawal may be delayed.

Weekly losses on the stock markets
Thus, the stock markets in Europe ended the week with a negative balance. The EuroStoxx 50 , the selective benchmark in the Old Continent, has risked the level of 4,200 points (intraday minimum: 4,183.3). Since last Friday it has fallen by 0.2%.

Something else has left the Spanish Ibex 35 (0.65%) which has also left behind the psychological level of 8,900 points. In this way, it has moved away from its resistance at 9,000-9,020 units , which has limited the consolidation of the selective during the last three weeks, explains Joan Cabrero, Ecotrader advisor .

The technical analyst also underlines that the 8,800 integers (now down 0.8%) are really “the dividing line that separates a potentially bullish context from a bearish one”, so the Ibex is still ‘safe’ from bears.

Regarding the technical aspect of the EuroStoxx, Cabrero places the “increasing resistance” at 4,270 and 4,350 integers . In his opinion, the continental index should beat these levels (for which it would have to rise 3.6%) to be able to trust in “a context of sustainable upward continuity” in the short term.

However, the national variable income maintains its enormous ‘gap’ with the European in the accumulated annual. While the Ibex 35 sees its revaluation limited so far in 2021 below 10%, the EuroStoxx 50 scores a rise greater than 18%.

Nearing 9,000 in the week
The Ibex 35 has touched 9,000 points. The impact of the unemployment figures in the US has been so great that it has ended up deciding the sign of the weekly closing. In this way, the selective again moves away from 9,000 points. A level that has become an impassable wall this week. It has not exceeded this barrier for just over two months.

“The only positive of this week is that it serves to reinforce, in case there was any doubt, the support of 8,800 points reinforces as the dividing line that separates a potentially bullish context from a bearish one, depending on whether it remains standing or is lost. respectively “, says Joan Cabrero, Ecotrader advisor. And he adds that in order to trust a bullish scenario and to be able to speak of strength in the short term, “the Ibex 35 must be able to break resistance at 9,000-9.

Tourism and banks bear the worst of it
By values, the tourism sector has suffered the blow of the American unemployment in a very hard way, with decreases of up to 3%.

The largest decreases have corresponded to Aena (3.32%), Meliá (3.27%), Colonial (2.93%), Amadeus (2.73%) and IAG (2.39%) . Only two stocks have closed in green: PharmaMar, which has risen 2.06%, and Solaria, 1.72%.

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