Tech stocks drag Europe’s STOXX 600 lower after strong U.S. jobs data

By Devik Jain

(Reuters) -European shares fell on Friday, dragged by technology stocks, after data showed the U.S. labour market remained tight, giving the Federal Reserve cover to continue on its path of raising interest rates aggressively.

The continent-wide index was down 0.4%, as of 1321 GMT, in line with a fall in U.S. stock index futures. The index was unchanged just before the data. [.N]

Data across the Atlantic showed U.S. employers hired more workers than expected in September, the unemployment rate unexpectedly dropped to 3.5%, and wage gains remained solid — keeping pressure on the Fed, which is attempting to cool the labour demand.

“The Fed is trying to slow things down and this report shows the U.S. economy is still chugging along fairly nicely,” said Ryan Detrick, chief market strategist at Carson Group.

“For the Fed to pivot sooner than expected, we need to see inflation data slowing down. And that’s why next week’s CPI is so important and wage growth today does little to likely suggest the Fed is going to slow down its aggressive hiking.”

September’s consumer price report next Thursday will help policymakers assess their progress in the battle against inflation ahead of the U.S. central bank’s Nov. 1-2 policy meeting.

The STOXX 600 had rallied earlier this week after a smaller-than-expected rate hike by Australian central bank and softer U.S. economic data spurred hopes of central bank pivot.

However, that optimism faded a bit after minutes from the European Central Bank’s last meeting fanned fears about the state of inflation in the euro zone and aggressive policy moves to tame it.

The index has gained 1.7% so far in the week and is on pace for its best weekly performance since late July.

Rate-sensitive technology and construction and materials sector were the top sectoral losers, down 2.5% and 1.4% respectively. Banks edged up 0.2% as euro zone bond yields moved higher in light of U.S. data.

European chipmakers fell after South Korea’s Samsung Electronics (OTC:) Co Ltd and U.S. chipmaker AMD signalled the chip slump could be much worse than expected.

Infineon (OTC:), BE Semiconductor, Soitec, Nordic Semiconductor, ASML, STMicroelectronics and ASMI dipped between 1.9% and 6%.

Adidas (OTC:) lost 3.5% after the German sporting goods maker put under review its business partnership with rapper and fashion designer Kanye West.

Renault (EPA:) jumped 3.1% after ODDO BHF upgraded the French carmaker’s stock.

Credit Suisse rose 4.6% after the lender said it would buy back up to 3 billion Swiss francs ($3 billion) of senior debt securities, making a show of strength as it seeks to reassure investors after a tumultuous week.

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