European stock markets closed mixed on Friday, with the CAC 40 down 0.09% despite positive corporate results that were below expectations. The UK’s Footsie gained 0.23%, while Germany’s Dax rose minimally. Investors are navigating uncertainties tied to the US election and recent economic data. The basic resources sector saw the largest gains, whereas insurance stocks fell. Overall, the markets await further catalysts as bond yields stabilize and tensions in the Middle East affect oil prices.
PARIS – European stock markets concluded the week with minimal fluctuations on Friday, as investors reacted to corporate earnings that offered fewer surprises than anticipated.
The CAC 40 in Paris experienced a slight decline of 0.09%, decreasing by 6.47 points. Meanwhile, the UK’s FTSE 100 rose by 0.23%, and Germany’s DAX saw a modest gain of 0.02%. The EuroStoxx 50 index inched up by 0.09%, though the FTSEurofirst 300 slipped by 0.02% and the Stoxx 600 fell by 0.04%.
The earnings season is underway, but investors are grappling with the uncertainties arising from upcoming U.S. elections and recently released economic data, in addition to a plethora of corporate reports.
Among companies within the STOXX 600 that released their third-quarter earnings, only 35.3% surpassed expectations, a decline from the average rate of 54% noted earlier this week, according to LSEG data.
Despite a stronger-than-expected improvement in German business sentiment, the market remains skeptical about the degree of monetary easing that the European Central Bank (ECB) may implement, especially as recent Purchasing Managers’ Index (PMI) data point to subdued activity within the eurozone.
Concurrently, investors are considering the potential implications of the U.S. election results.
Analysts at Citigroup noted, “With limited U.S. data this week, markets have begun to incorporate higher short-term uncertainty.”
MARKET MOVEMENTS
The basic resources sector marked the largest gain at 2.08%, while the insurance industry faced one of the most significant declines, falling by 0.81%.
Sanofi led the CAC 40 with a rise of 2.31%, driven by a robust increase in third-quarter operating profit.
Conversely, Alten dropped 7.46%, as the engineering firm, heavily involved in the European automotive market, revised its annual targets downward due to a slowdown in business activity.
Rémy Cointreau, the spirits company, saw its stock rise by 0.59% after a turbulent trading day, linked to a revision of its forecasts for the 2024-2025 financial year following a 16.1% year-over-year decline in organic sales for the second quarter.
NatWest, a banking group, experienced a 0.58% increase in its stock price as it reported a 25% growth in third-quarter profit.
US MARKETS
U.S. indexes benefited from declining bond yields over the weekend, with the 10-year Treasury yield closing at its highest since July on Wednesday.
At the end of trading in Europe, Wall Street showed a stable Dow Jones, while the S&P 500 rose by 0.6% and the Nasdaq Composite climbed 1.27%.
FOREX AND BOND MARKETS
Foreign exchange markets remained relatively steady on Friday, awaiting new catalysts.
The German ten-year yield rose by 0.2 basis points, reaching 2.292%, and the two-year yield also climbed by 0.2 basis points to 2.148%.
In the U.S., by the close in Europe, the ten-year Treasury yield increased by 0.4 basis points to 4.206%, while the two-year yield dropped by 0.6 basis points to 4.0595%.
COMMODITIES
Oil prices experienced an uptick amid rising tensions in the Middle East. Brent crude increased by 1.49%, priced at $75.49 per barrel, while West Texas Intermediate (WTI) rose by 1.54% to $71.27 per barrel.
LOOKING AHEAD
Stay tuned for developments on the financial markets as they continue to evolve.