European stocks close higher as region’s business activity booms

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European stocks closed higher for the third consecutive session on Monday as business activity in the region expanded at its fastest pace in more than a decade.

During a day of lower trading volumes because of an Independence Day public holiday in the US, which closed Wall Street, the region-wide Stoxx Europe 600 index climbed 0.3 per cent.

Strong services purchasing managers’ indices readings in Spain and Italy in particular lifted the overall reading for the eurozone services sector to 58.3 in June, its highest level since July 2007.

In the case of Italy, “the improvement was linked to easing of Covid restrictions”, said Mel Debono, senior European economist at Pantheon Macroeconomic. “Most of the country’s regions moved into the least restrictive white zones midway through the month.”

Madrid’s Ibex 35 index rose 0.4 per cent, while Milan’s FTSE MIB ended the session up 0.6 per cent.

London’s FTSE 100 index, which has a heavy weighting to energy groups, also closed up 0.6 per cent as the price of oil rose further.

Global marker Brent crude jumped more than 1 per cent to $77.26 a barrel, its highest level since October 2018, as Opec and its allies abandoned a decision over whether to increase its oil output.

West Texas Intermediate, the US benchmark, rose more than 1.5 per cent to $76.35 a barrel, nearing a three-year high.

In Asia, markets were rattled after Beijing broadened its crackdown on tech platforms to include Boss Zhipin, an online recruitment company, and Chinese truck-hailing apps Yunmanman and Huochebang.

The moves rippled through markets in the region, taking the Hang Seng Tech index down 2.3 per cent, underperforming the wider Hang Seng benchmark, which slid 0.6 per cent.

In the US, analysts were digesting Friday’s non-farm payrolls data that showed the labour market had added 850,000 jobs in June, well above economists’ expectations and higher than the revised 583,000 figure for May.

Investors would now be watching for economic signals on the direction of the recovery from the US this week, said Luca Paolini, chief strategist at Pictet Asset Management.

Further strong weekly jobless claim numbers could increase pressure on the US Federal Reserve to consider winding down its policies that have supported the economy through the pandemic.

“We will have the minutes of the Federal Reserve [Wednesday]. People will try to see if anything in that can shift the Fed in unpredictable ways,” Paolini said.

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