European stocks have their worst drop in 2 weeks on US employment

On Friday European stocks were negative as U.S. employment signaled a decrease in growth in the world’s largest economy, with retail and travel stocks subjected to American markets hit the worst.

The pan-European STOXX 600 index dropped 0.6%, marking its worst drop in two weeks after data illustrated the U.S. economy produced the least jobs in seven month in August. Global equities also fell after the data.

Retail stocks were among the worst performers for the day, losing 0.9%. Bookseller WH Smith, which makes at least a quarter of its earnings from U.S. customers, was the worst performer in the sector, as it dropped 3.4%. Travel stocks hit 1%.

The disappointing U.S. data was the result of an increase in the cases of the highly contagious Delta variant of the coronavirus. However, analysts considered as positive that weakness in the job market would give less incentive to the Federal Reserve to control in liquidity measures.

European technology stocks were the best performers for the week, gaining almost 2% as investors moved to sectors most resistant to troubles caused by the pandemic.

A private survey also showed activity in China’s services sector contracted sharply in August as restrictions to rein in the COVID19 Delta variant threatened to disrupt the recovery.

Euro zone business activity remained strong last month, IHS Markit’s survey showed, suggesting the bloc’s economy could return to pre-COVID-19 levels by year-end in spite of fears about the Delta variant of the coronavirus and widespread supply chain issue.

The European Central Bank is set to meet next week, with some of the more aggressive members recently calling on the ECB to reduce its pandemic-era bond purchases.

While strong earnings and a relatively high rate of coronavirus vaccinations have supported a European economic recovery, investors are cautious that tighter monetary conditions and an increase in inflation could result in choppier market conditions through the rest of this year. The STOXX 600 is projected to end 2021 around current levels.