Europe Markets: European stocks log modest gains as the quarter kicks off, boosted by China data

Upbeat economic gave European stocks a boost at the start of the third quarter on Wednesday, with German equities in the lead, but gains were muted elsewhere as investors waited for U.S. private-sector payrolls data due later.

The Stoxx Europe 600 index SXXP, +0.36% rose 0.3% to 361.66, after a modestly higher close on Tuesday. The index logged a 12.5% gain for second-quarter, the best percentage gain since the first quarter of 2015. But that comes after an extremely weak first quarter, as the coronavirus pandemic emerged.

The German DAX DAX, +0.65% climbed 0.7%, with heavily-weighted auto maker Daimler DAI, +0.19% rising 1.2% and drugmaker Bayer BAYN, +1.63% gaining over 3%.

Elsewhere, gains were more modest, with the FTSE 100 UKX, -0.05% up 0.1% and the French CAC 40 PX1, -0.12% down 0.1% each.

“Basically, traders are taking a break after a stellar second quarter, and more important, they do not want to bet big ahead of U.S. ADP data. There is also this constant battle of arguments between bulls and bears if the recovery in Chinese economic data can outweigh the spikes in coronavirus cases in the U.S.,” said Naeem Aslam, chief market analyst at AvaTrade.

The Caixin China manufacturing purchasing managers index (PMI) climbed to a six-month high of 51.2 in June from 50.7 in May. That data provides “further evidence that the world’s second-biggest economy has some serious momentum behind it.”

Upbeat data came from Europe as well, with the final eurozone manufacturing PMI rising to 47.4 in June, from a previous estimate of 46.9 and a May level of 39.4. The data add further to signs that “the eurozone factories are seeing a strong initial recovery as the economy lifts from COVID-19 lockdowns,” said Chris Williamson, chief business economist at IHS, in a press release.

Sentiment also rebounded sharply, but Williamson said production and sentiment remain below pre-pandemic peaks, and weak demand and social distancing will keep dragging on the recovery.

Dow Jones Industrial Average futures YM00, -0.33% were modestly lower, a day after the Dow DJIA, +0.84% and the S&P 500 SPX, +1.54% closed out the second quarter with the best performance in more than 20 years.

Caution was setting in ahead of a rush of U.S. data to be released before Friday’s July 4 holiday in the U.S. Wednesday’s ADP data is forecast to show 2.9 million private-sector jobs were added in June, following May’s 2.8 million decline, according to a survey from Barrons. Economists expect Thursday’s jobs data to show an employment gain of 3 million, after a surprising 2.5 million increase in May.

Among stocks on the move, oil companies were moving higher as U.S. CLQ20, +2.77% and Brent crude prices BRNQ20, -1.36% climbed over 2%, after the American Petroleum Institute reported late Tuesday that U.S. crude supplies fell by 8.2 million barrels for the week ended June 26, according to sources.

Shares of BP BP, -0.68% BP, +0.96% rose 1.7% and Royal Dutch Shell Group RDS.A, -2.24% RDS.B, -2.84% rose 1.7%.

Leading the index gainers, shares of Clariant CLN, +9.56% rose 9% after the Swiss chemical group said it completed a $1.6 billion sale of its Masterbatches business to polymer materials maker PolyOne POL, +0.84%

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