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 seasoned financial analyst and market enthusiast, my in-depth knowledge of global financial markets positions me as a reliable source on the subject. I've closely followed and analyzed market trends, economic indicators, and central bank decisions, enabling me to provide insightful perspectives on the recent developments in the European stocks and related topics.
In the recent article discussing European stocks closing at a two-year high, several key concepts and events are highlighted:
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European Stock Performance:
- The pan-European Stoxx 600 closed 1.1% higher.
- Sectors like household goods saw a significant jump of 5.2%.
- Tech stocks, on the other hand, experienced a 0.7% decline.
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Top Performers:
- Remy Cointreau, a French drinks maker, rose 15% due to better-than-expected third-quarter sales decline.
- Luxury fashion house LVMH also gained 13% with increased fourth-quarter sales, indicating a boost for the luxury sector.
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European Central Bank (ECB) Decision:
- The ECB decided to keep interest rates steady at the current record high.
- The euro zone deposit rate was maintained at 4%.
- The ECB expressed its commitment to keeping rates high for a "sufficiently long duration" to bring inflation to the target.
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Market Speculation on ECB's Future Moves:
- Despite the ECB's decision, there is speculation in the market about a potential pivot to rate cuts in April or June.
- This speculation is based on the anticipation of data from spring wage negotiations.
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Consumer Confidence and Economic Sentiment:
- U.K. consumers are reported to be the most confident since January 2022, buoyed by falling inflation.
- In France, consumer confidence increased, but there was a mixed picture in Germany.
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U.S. Market Performance:
- U.S. stocks were slightly higher after economic growth for the quarter exceeded expectations.
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Global Market Overview:
- Asia-Pacific markets mostly declined, with electric vehicle stocks in the region dropping for a second day.
- Investors also considered inflation data from Tokyo.
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Market Outlook:
- European stocks closed at their highest level in more than two years, with markets pricing in an over 80% probability of an ECB rate reduction in April.
These insights are grounded in a comprehensive understanding of market dynamics, central bank policies, and global economic indicators, reinforcing my expertise in the field of financial analysis and market trends.
