European markets climbed as first-quarter earnings from banks HSBC and Societe Generale came in strongly.
How did markets perform?
The Stoxx 600 SXXP, +0.40% rose 0.4% to 390.5, countering a 0.6% fall Thursday.
The U.K.’s FTSE 100 UKX, +0.76% climbed 0.7% to 7,404.1, more than reversing its drop Thursday of 0.5%.
The pound GBPUSD, -0.3146% retreated 0.2% to $1.3002, on top of Thursday’s decline of 0.4%.
Italy’s FTSE MIB I945, +0.14% was up marginally to 21,734.4, a gain of 0.1%. It fell 0.8% Thursday.
France’s CAC 40 PX1, +0.31% was 0.4% higher to 5,558.3 after sinking 0.9% Thursday.
What’s moving the markets?
Investors will be eyeing U.S. jobs numbers Friday when the nonfarm payrolls report lands, but in the meantime European markets seem to have caught a bid. Bank of America Merrill Lynch strategists are eyeing a recovery in European stocks, long caught in the doldrums of the continent’s low growth and interest rates stuck in negative territory.
The authors point out that U.S. equities that benefit from rising market cycles (sectors such as industrials, autos, travel) have outperformed defensives (health care, consumer staples, etc.) since January. European cyclical stocks, they add, have more room to rise as economic data improves and bullishness hasn’t become extreme.
In economic data, the U.K. Purchasing Manager Index (PMI) for services came in slightly above consensus at 50.4 versus 50.1 expected. The relatively weak figure, however, remains indicative of an economy barely ticking along as Brexit uncertainty dominates the outlook.
After weeks of encouraging rumblings from the U.S. side of U.S.-China trade negotiations, reports emerged that the deal is unlikely to deliver several key things the U.S. wanted at the outset. The U.S. Chamber of Commerce said on a call with reporters that the deal wouldn’t likely address cyber theft of intellectual property, or subsidies to state industries.
Which stocks are active?
HSBC Holdings PLC HSBA, +2.58% reported a banner first quarter earnings result as wealth management and retail banking profits lifted group pretax profits by 31% year-over-year. CEO John Flint said the British bank remains “alert to risks in the global economy” and has positioned itself accordingly in terms of costs and investment.
Societe Generale SA GLE, +3.31% managed to surpass market expectations for net profit in the first quarter, which reached €631 million versus the €558 million expected. The figure was down from €850 million in the same period a year earlier, however; the French lender cited its restructuring plan as a headwind, but noted that it had made progress in areas such as bolstering the amount of capital it holds in reserve.
German industrials giant BASF S.E. BASF, +0.92% reported net profit of €1.27 billion for the first quarter, and said declines in key markets for autos and chemicals had weighed on the company’s results. The company reaffirmed its full year guidance for 2019.
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