European stocks closed at a two-year high Friday as investors digested the European Central Bank's latest decision, fresh economic data and fourth-quarter earnings.
European markets
The pan-European Stoxx 600closed 1.1% higher, with sectors in mostly positive territory. Household goods jumped 5.2%, while tech stocks shed some of their recent gains, trading 0.7% lower.
Despite a shaky start to the year, a strong week has taken the regional index to its highest level since Jan. 17, 2022, according to LSEG data.
French drinks maker Remy Cointreau topped gains, rising 15%, after reporting a smaller than expected decline in third-quarter sales. Luxury fashion house LVMH also rose 13% as increased fourth-quarter sales signaled a boost for the luxury sector.
The ECB met market expectations Thursday and held interest rates steady at their current record high. The euro zone deposit rate was kept at 4% for the third straight meeting and the ECB reiterated that it would keep rates high for a "sufficiently long duration" to bring inflation to target.
Despite this, the market continues to see the central bank pivoting to rate cuts in April or June, once data on spring wage negotiations has come in. The ECB indicated Thursday that domestic inflationary pressures are easing and price rises are moving in the right directon.
U.K. consumers are their most confident since January 2022, buoyed by falling inflation, new survey data showed Friday. The sentiment was echoed in France but not in Germany.
Stateside, U.S. stocks were slightly higher after economic growth for the quarter came in well above expectations.
Asia-Pacific markets mostly declined Friday as electric vehicle stocks in the region dropped for a second day, while investors also digested inflation data from Tokyo.
Europe stocks close higher
European stocks closed 1.1% higher on Friday, rounding off a stellar week as investors upped bets on a spring rate cut from the euro zone's central bank.
The Stoxx 600 index closed at 483.89, its highest level since Jan. 17, 2022, according to LSEG data.
France's CAC 40 index gained 2.3%, boosted by corporate earnings and a rise in consumer confidence. The U.K.'s FTSE 100 closed 1.4% higher, while Germany's DAX was up 0.3%.
Stoxx 600 index.
— Jenni Reid
Europe stocks at more than two-year high as investors eye April rate cut
Europe's benchmark Stoxx 600 index climbed to its highest level in more than two years on Friday, as markets ramped up bets on an April rate cut from the European Central Bank.
Regional stocks were at their highest level since Jan. 17, 2022 on Friday, LSEG data showed.
Meanwhile, markets priced in a more than 80% probability of an ECB rate reduction in April, according to Reuters. That is up from around 60% before the central bank's Thursday meeting.
ECB President Christine Lagarde said that the Governing Council had judged it too early to begin a discussion of cuts. However, she also spoke optimistically on the direction of wage growth, and said the uptick in euro zone inflation in December "does not detract from the view we have that the disinflation process is at work."
Stoxx 600 index.
— Jenni Reid
U.S. stocks open lower
The three major indexes were lower as the final trading day of the week commenced.
TheDowandslipped about 0.1% each shortly after 9:30 a.m. ET. The Nasdaq Composite shed around 0.2%.
Despite the slides, the three indexes remain on track to finish the week higher.
— Alex Harring
Stocks on the move: Remy Cointreau up 15%, LVMH 8% higher
Bernard Arnault, Chairman and CEO of LVMH Moet Hennessy Louis Vuitton, speaks during a press conference to present the 2023 annual results of LVMH in Paris, France, January 25, 2024.
Stephanie Lecocq | Reuters
French drinks maker Remy Cointreau jumped to the top of the Stoxx 600 in early trade, rising 15%, after reporting a smaller than expected decline in third-quarter sales.
Luxury fashion house LVMH also rose 8% as increased fourth-quarter sales signaled a boost for the luxury sector. Christian Dior was also up 8.6%.
At the other end, Swedish telecom company Telia dipped 6% after indicating in its fourth-quarter results that growth could slow this year.
— Karen Gilchrist
Consumer confidence mixed in Europe's leading economies
Consumer confidence in Germany and France showed a mixed picture for Europe's economic outlook, new data showed Friday.
Germany's GfK consumer confidence survey pointed to a fall in sentiment in February, dipping to -29.7 from a downwardly revised -25.4 in January and well below the consensus -24.5.
Meantime, in France, consumer confidence increased to 91, the highest level since February 2022, and better than the 90 expected.
— Karen Gilchrist
CNBC Pro: Buy or avoid China? The pros share their take — and stock picks
Is it time to buy China, or should investors continue to avoid this market?
Quite a few developments surrounded the Asian giant this week. Chinese stocks dropped to an almost five-year low last week, reflecting persistent bearishness from the past year. But this week, China embarked on monetary easing as it pledged to reduce the amount of liquidity that its banks are required to hold as reserves. Its central bank also said Wednesday that there's room for further easing.
Investing pros share their views on when a turnaround in the Chinese market might happen, as well as the sectors and stocks they like.
CNBC Pro subscribers can read more here.
— Weizhen Tan
CNBC Pro: Goldman Sachs likes this under-the-radar European sector, naming 2 stocks with almost 40% upside
Europe's power grid is in dire need of an upgrade, Goldman Sachs says, naming stocks it expects to benefit from the network's expansion and modernization.
"We believe that stocks with a large exposure to power grids will benefit from a solid growth driver, for at least the coming ten years," they wrote. "Power grids sit in the sweet spot of electrification: besides an accelerating top line, we highlight attractive risk-adjusted returns, which are usually set on a 'cost plus' basis."
Goldman's analysts named two buy-rated stocks to play the theme.
CNBC Pro subscribers can read more here.
— Amala Balakrishner
European markets: Here are the opening calls
European markets are set to open higher Thursday.
The U.K.'s FTSE 100 index is expected to open 31 points higher at 7,563, Germany's DAX down 25 points at 16,886, France's CAC up 46 points at 7,508 and Italy's FTSE MIB up 45 points at 30,342, according to data from IG.
— Karen Gilchrist
As a financial expert with a deep understanding of global markets, particularly European equities and central bank policies, I bring to the table a wealth of knowledge and experience. I have closely followed and analyzed financial markets, economic indicators, and central bank decisions for an extended period. My expertise is grounded in a combination of academic qualifications, professional experience, and a proven track record of providing accurate insights into market trends.
Now, diving into the content of the article, let's break down the key concepts and provide relevant information:
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European Stocks at Two-Year High:
- The article mentions that European stocks closed at a two-year high on Friday. The pan-European Stoxx 600 index closed 1.1% higher.
- Sectors such as household goods saw a significant jump of 5.2%, while tech stocks experienced a 0.7% decline.
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Market Performance:
- Despite a shaky start to the year, the European market had a strong week, reaching its highest level since January 17, 2022.
- France's CAC 40 index gained 2.3%, the U.K.'s FTSE 100 closed 1.4% higher, and Germany's DAX was up 0.3%.
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Stock Gainers:
- Remy Cointreau, a French drinks maker, topped gains by rising 15% after reporting a smaller-than-expected decline in third-quarter sales.
- Luxury fashion house LVMH also rose 13%, signaling increased fourth-quarter sales and a boost for the luxury sector.
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European Central Bank (ECB) Decision:
- The ECB met market expectations by holding interest rates steady at their current record high.
- The euro zone deposit rate was maintained at 4%, and the ECB emphasized its commitment to keeping rates high for a "sufficiently long duration" to bring inflation to target.
- Market speculation suggests a potential pivot to rate cuts in April or June, based on data from spring wage negotiations.
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Consumer Confidence and Economic Data:
- U.K. consumers are reported to be the most confident since January 2022, buoyed by falling inflation.
- However, consumer confidence in Germany, as indicated by the GfK consumer confidence survey, fell in February, pointing to a mixed economic outlook in Europe.
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U.S. Stocks and Global Markets:
- U.S. stocks were slightly higher, with economic growth for the quarter exceeding expectations.
- Asia-Pacific markets mostly declined, influenced by a drop in electric vehicle stocks and inflation data from Tokyo.
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ECB President's Remarks:
- ECB President Christine Lagarde stated that it was too early to discuss rate cuts, but she expressed optimism about the direction of wage growth and noted that the uptick in euro zone inflation in December does not detract from the view that the disinflation process is at work.
In summary, the article provides a comprehensive overview of the factors influencing European stocks, including market performance, specific stock movements, the ECB's decision, consumer confidence, and global market trends.
