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European stocks mixed; German consumer sentiment weakens

Published 01/26/2024, 04:16 PM
Updated 01/26/2024, 04:16 PM
© Reuters. - European stock markets traded in a mixed fashion Friday, as investors digested corporate earnings and the signals from the European Central Bank’s recent meeting ahead of the release of key U.S. inflation data.

At 03:10 ET (08:10 GMT), the DAX index in Germany traded 0.2% lower, while the CAC 40 in France traded up 1.5% and the FTSE 100 in the U.K. rose 0.8%.

ECB holds off from rate cut talk, for now

The ECB kept interest rates unchanged at a record-high 4% on Thursday and gave no hint that it is even contemplating a start to easing with President Christine Lagarde twice noting in the accompanying news conference that it was "premature" to discuss rate cuts.

However, she also recognised that inflation had fallen faster than the ECB had expected last autumn, suggesting that the time to start discussing a first rate cut is fast approaching.

A change in tone at the ECB's meeting in March, when the central bank is also set to issue new economic projections, could clear the way for a rate cut most likely in June.

Such talk could help to boost consumer confidence, which is badly needed judging from the latest German sentiment figures.

The GfK German consumer sentiment index fell to -29.7 points heading into February from a revised -25.4 the previous month, suggesting a sustained recovery for Europe's biggest economy remains some way away.

Data due out in the U.S. later in the session centers around December personal consumption expenditures, which could provide fresh insight on the future path of interest rates.

LVMH benefits from resilient demand

In the corporate sector there were more quarterly results for investors to digest.

LVMH (EPA:LVMH) stock rose 8% as the market reacted to the world’s biggest luxury group posting a 10% rise in fourth-quarter sales late on Thursday, as growth edged up from the previous quarter, driven by resilient demand for its high-end fashion over the all-important end-of-year period.

Remy Cointreau (EPA:RCOP) stock soared 11% after the French spirits maker posted a slightly smaller-than-expected decline in third quarter sales, helped by a sequential improvement in the United States and major destocking in China ahead of the Chinese New Year.

On the flip side, AB Volvo (OTC:VLVLY) stock fell 2% after the Swedish truck maker said it would gradually cut production following years of supply chain disruptions.

Crude on course for hefty weekly gains

Oil prices fell Friday, handing back some of the previous session’s strong gains, but are still on course for hefty weekly gains on the back of healthy U.S. economic growth and signs of Chinese stimulus.

By 03:10 ET, the U.S. crude futures traded 0.8% lower at $76.74 a barrel, while the Brent contract dropped 0.5% to $82.00 a barrel, after climbing to their highest levels since December during the previous session.

The crude benchmarks are both still on course for gains of more than 4%, their biggest weekly gains since October, after data on Thursday showed the U.S. economy expanded more quickly than expected in the fourth quarter, suggesting economic resilience from the world’s largest crude consumer.

China, the world's second-largest oil consumer, had also announced a deep cut to bank reserves to spur economic growth earlier in the week, while oil supply disruptions in the Red Sea continued.

Additionally, gold futures rose 0.1% to $2,020.10/oz, while EUR/USD traded 0.2% lower at 1.0820.

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