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European shares experienced a decline on Thursday as market participants absorbed disappointing eurozone construction and retail sales data, while also preparing for upcoming US non-farm payroll figures.
The pan-European Stoxx 600 index fell by 0.3% to 513, with most major stock indices in Europe trading lower. Notable exceptions included Spain's IBEX and Germany's DAX, which managed to move against the general downward trend.
Derren Nathan, head of equity research at Hargreaves Lansdown, noted that the latest US Labor report did little to alleviate concerns about the health of the world's largest economy. Job openings fell more than anticipated to 7.67 million, though hires increased by 0.2% month-over-month to 273,000. The focus now shifts to Friday’s crucial non-farm payrolls data, which is projected to reveal an increase of 161,000 jobs and a slight decrease in the unemployment rate to 4.2%. Market participants are closely watching for a potential 0.25% rate cut this month, with speculation rising about a possible 0.5% reduction.
In eurozone economic news, construction activity continued to struggle in August, with new orders declining sharply and rising prices raising concerns. According to a survey, the HCOB eurozone Construction Purchasing Managers' Index remained unchanged from July's six-month low of 41.4, indicating a significant contraction in construction activity. This marks the 28th consecutive month of declining activity in the sector.
Retail sales in the eurozone showed only a marginal increase in July, with the seasonally adjusted retail trade volume rising by 0.1% in June. In the broader EU, sales edged up by 0.2%. This followed a 0.4% decline in sales in both the eurozone and the wider bloc in June.
German factory orders rose by 2.9% month-over-month in July, surpassing forecasts of a 1.5% drop. However, this figure was somewhat skewed by larger orders. The Ifo institute revised its growth forecast for Germany, predicting stagnation this year and downgrading the growth forecast for the following years.
Oil prices saw a slight increase after sharp declines earlier in the week, attributed to rumors that the OPEC+ group might reverse production cuts. West Texas Intermediate traded at $69.57, up 0.53%, while Brent Crude was at $73.19, a rise of 0.67%.
In company news, Volvo's (LSE:0MHW) shares rose following its decision to abandon the goal of producing only fully electric vehicles by 2030, now planning to include hybrid models as well. SSP (LSE:SSPG) saw its shares decline after a downgrade to 'equalweight' by Morgan Stanley. Associated British Foods experienced a drop in shares due to a forecasted decline in Primark’s like-for-like sales, influenced by adverse weather conditions. Conversely, housebuilder Vistry's (LSE:VTY) shares increased after announcing a significant share repurchase and reporting a 7% rise in first-half pre-tax profit.
