European stock markets rallied again during Friday’s trading (August 7), heading for their best weekly gains since late June. The STOXX Europe 600 index rose approximately 0.2%, with Germany’s DAX gaining 0.3%, while France’s CAC 40 and the UK’s FTSE 100 each rose by about 0.2%.
The gains were primarily driven by European corporate earnings reports that exceeded expectations. Earnings growth for companies within the STOXX 600 is now projected to reach nearly 21% year-on-year, significantly higher than the initial forecast of around 12.5%.
Market sentiment was also bolstered by falling bond yields and a temporary easing of oil prices. These conditions alleviated concerns regarding corporate operating costs and made stocks attractive to investors once again.
However, tensions in the Strait of Hormuz have returned to the spotlight. Iran is reportedly considering a ban on vessels from the US, Israel, and nations deemed hostile. This situation risks hindering the full opening of the Hormuz shipping lane and could drive energy prices back up.
Markets are also awaiting the US Nonfarm Payrolls (NFP) report due out on Friday. Strong labor data could increase the likelihood of a Federal Reserve interest rate hike and keep global borrowing costs elevated, potentially capping the stock market rally.
Newsmaker Analysis: European markets continue to draw strong support from corporate performance, yet two major risks loom: tensions in Hormuz and the US NFP report. If the NFP figures are not overly strong and Middle East tensions subside, the STOXX 600 has a chance to sustain its weekly gains. Conversely, a surge in oil prices and robust US labor data could trigger profit-taking. (asd)
Source: Newsmaker.id