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European stocks up, China recovers, eyes on job data
European equities advanced after the U.K.–Norway £10 billion defense deal, while China’s stronger PMIs and Alibaba’s cloud-driven outlook lifted risk appetite. Attention now turns to U.S. employment data for clues on the Federal Reserve’s next steps.
The STOXX Europe Aerospace & Defense index rose 2.2% after the U.K.–Norway defense deal was announced.
Investors await U.S. employment data to give a better reading of the Fed’s next moves.
China presented data on the expansion of its manufacturing activity, while Alibaba showed good growth estimates.
Europe higher after U.K.–Norway deal; defense leads
European stocks finished broadly higher after the United Kingdom announced Norway’s £10 billion order for British-built warships to bolster its armed forces. A government statement said the agreement could add 4,000 jobs by 2030, providing a meaningful economic boost, as reported by CNBC. The STOXX Europe Aerospace & Defense index gained 2.2%. At the close, the FTSE 100 rose 0.10%, the DAX increased 0.57%, the CAC 40 rose 0.05%, and the IBEX 35 rose 0.02%. In foreign exchange, the pound sterling rose by 0.30% and the euro increased by 0.27% relative to the dollar.
Investors await U.S. employment data
U.S. equities were closed for the holiday, but focus shifts to Friday, September 5 payroll data. Nonfarm payrolls are expected at +75k (prior +73k), a pace below the five-year average—so an in-line print would still signal softness. The unemployment rate is seen ticking up to 4.3%. Any downside surprise could raise the odds of Fed cuts; CME FedWatch currently implies two 25 bp reductions by year-end 2025. FOMC participants will update projections at the September meeting.
China’s PMIs beat; Alibaba guidance lifts sentiment
China’s manufacturing PMI rose to 50.5 (from 49.5), returning to expansion on firmer new export orders and steadier domestic demand. Non-manufacturing PMI (services and construction) improved to 50.3 (from 50.1). Amid sustained real estate headwinds, the beats stand out.
Separately, Alibaba posted solid quarterly results driven by its cloud computing segment and discussed the development of a new chip, lifting growth expectations. Shares rallied 12.9% intraday. Revenue grew ~2% YoY, while profits rose ~78% YoY, reinforcing the AI-data infrastructure theme.
Key economic events this week
Tuesday
- Eurozone: Inflation rate
- U.S.: Manufacturing PMI
Wednesday
- Australia: GDP growth rate
- Canada: GDP growth rate
- U.S.: JOLTS job openings
Thursday
- U.S.: Non-farm employment change (ADP)
- U.S.: Crude oil inventories
Friday
- U.K.: Retail sales (MoM)
- U.S.: Nonfarm payrolls
- U.S.: Unemployment rate
- Canada: Unemployment rate
