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Europe midday: Stocks extend rally despite grim economic data

Wed 03 June 2020 12:19 | A A A

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(Sharecast News) - Stocks across Europe are continuing to bound ahead amid optimism about the impact that the easing of lockdown measures across the Continent will have.

Yet some analysts were wary, warning of the disconnect between stockmarkets and the events unfolding on the main street.

The latest batch of economic data out of Europe on Wednesday, while better in some cases, were certainly grim, although a survey of services sector activity in China did surprise sharply to the upside.

Summing up some analysts' concerns, Michael Hewson, chief market analyst at CMC Markets UK, said: "For all of this ability for stock markets to be able to shrug off anything that can be thrown them, there continues to be a growing sense of unease at the disconnect between what is happening on Wall Street, and what is unfolding on main street in terms of sharply rising unemployment."

As of noon, the benchmark Stoxx 600 was ahead by 1.36% at 364.68, alongside an advance of 2.35% to 12,303.66 for the German Dax, while the Cac-40 added 1.99% to 4,955.64.

Overnight, survey compiler Caixin's services sector Purchasing Managers' Index jumped from a reading of 44 for April to 55 in May (consensus: 47.4).

But the data out of Europe was far less upbeat.

The clsoely-followed euro area services sector PMI from IHS Markit for May was revised higher from a preliminary reading of 28.7 to 30.5 (April: 12.0), thanks to upwards revisions to data for France and Germany - but remained far below the 50 point mark that denoted growth.

Also at the euro area level, Eurostat reported only a small increase in the unemployment rate from 7.1% for March to 7.3% in April (consensus: 8.2%).

Yet economists were quick to point out how Eurostat excluded furloughed workers from its figures and the fact that many were not even able to look for work during April, meaning they were excluded from the jobless tally.

More timely unemployment figures out in Germany for May appeared to bear that out, with joblessness jumping by 238,000 (consensus: 188,000).

That was on top of a 372,000 increase in April.

Over in Switerland meanwhile, gross domestic product data revealed a 2.6% quarter-on-quarter fall (consensus: -2.0%), as accomodation and food services activity cratered by 23.4%.

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