The European stock markets ended the week with modest gains on Friday, as investors weighed the mixed signals from the global economy and the COVID-19 situation. The DAX index in Germany traded 0.2% higher and the FTSE 100 in the U.K. climbed 0.2%, while the CAC 40 in France traded largely unchanged.
The DAX index is the most important index in Germany and the leading index of the Deutsche Börse. It consists of the 40 major German blue chip companies trading on the Frankfurt Stock Exchange . The DAX index is considered a strong measure of German and European economic health.
The FTSE 100 index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is seen as a gauge of prosperity for businesses regulated by U.K. company law.
The CAC 40 index is a benchmark French stock market index. It represents a capitalization-weighted measure of the 40 most significant companies among the 100 largest market caps on the Euronext Paris stock exchange.
What were the main drivers of the market movements?
The European stock markets were supported by some positive economic data and corporate earnings reports, as well as hopes for more stimulus measures from the European Central Bank (ECB) and other central banks.
On Friday, Eurostat reported that the eurozone economy grew by 2.2% in the third quarter of 2023, beating expectations of a 2.1% expansion. The growth was driven by strong consumer spending and investment, as well as a rebound in exports after a slowdown in the previous quarter due to supply chain disruptions and labor shortages.
The eurozone inflation rate also eased slightly to 3.5% in October, down from 3.6% in September, but still well above the ECB’s target of close to but below 2%. The ECB has maintained its ultra-loose monetary policy stance, saying that it expects inflation to moderate in the medium term and that it will keep interest rates at record lows until it sees clear evidence of a sustained increase in inflation.
Meanwhile, some of the leading European companies reported better-than-expected earnings for the third quarter, boosting their share prices and market sentiment. For example, Airbus, the world’s largest planemaker, posted a net profit of €1.9 billion ($2.1 billion), up from €736 million ($820 million) a year ago, as it delivered more aircraft and benefited from cost-cutting measures. Adidas, the German sportswear giant, also reported a net profit of €578 million ($644 million), up from €546 million ($609 million) a year ago, as it saw strong demand for its products across all regions and categories.
However, the European stock markets also faced some headwinds from the rising COVID-19 cases and deaths in some countries, especially Germany and Austria, which have imposed new lockdowns and restrictions to contain the spread of the virus. The pandemic has also raised concerns about the potential impact on consumer confidence, business activity and travel demand.
Moreover, the European stock markets were influenced by the global market trends and geopolitical developments, such as the U.S.-China trade tensions, the Iran nuclear talks, and the COP26 climate summit. The U.S. stock markets closed mixed on Friday, as investors digested a mixed batch of economic data and earnings reports, as well as President Joe Biden’s $1.75 trillion social spending plan that faces uncertainty in Congress. The Asian stock markets also ended mixed on Friday, as investors awaited more clues on China’s economic outlook and policy direction after its top leadership meeting this week.
What is the outlook for the European stock markets?
The outlook for the European stock markets remains uncertain and volatile, as they depend on various factors such as:
– The evolution of the COVID-19 pandemic and its impact on public health, economic activity and consumer behavior.
– The pace and effectiveness of vaccination campaigns and booster shots across Europe and other regions.
– The policy actions and guidance from the ECB and other central banks regarding interest rates, asset purchases and stimulus measures.
– The economic data and indicators from Europe and other major economies that reflect the strength and resilience of the recovery.