European stocks rose
European stocks rose on Friday, bucking weakness in US equity futures and in Asian markets, as an update from the world’s largest luxury retailer showed that spending among the wealthiest consumers remains resilient.
Europe’s Stoxx 600 index advanced as LVMH jumped 9.1%, the most since March 2022, after the maker of Louis Vuitton handbags and Dior fashions reported a 10% increase in fourth-quarter sales. The gains spread to luxury peers, with Christian Dior SE, Moncler SpA and Richemont also rallying. Strategists at Barclays Plc upgraded European luxury stocks to overweight on Friday, citing their global diversification as a strength.
Contracts on the S&P 500 and the Nasdaq 100, on the other hand, signaled a halt to six days of dizzying gains that have propelled Wall Street stocks to records, as investors parsed weak results from Intel Corp. Later, American Express Co. and Colgate-Palmolive Co. will be among the high-profile companies closing out the reporting week.
Traders pushed US stocks to another all-time high on Thursday as the economy remains resilient, with the latest US gross domestic product data defying forecasts for a recession. Investors will get another key reading of US pricing pressures later Friday, with the release of the core personal consumption expenditures index, the Federal Reserve’s preferred gauge of underlying inflation.
The rally has been fueled by falling inflation and the possibility that the Fed will cut rates in 2024. It has already blown past the Wall Street consensus over where the index will finish the year. On Wednesday, the gauge surpassed 4,867, the average level where forecasters in a Bloomberg survey pegged it 11 months from now.
“Yesterday’s US GDP data was the definition of Goldilocks in numbers: good growth, slowing inflation. A dream come true,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The dollar was steady and yields on benchmark 10-year Treasuries slipped.
Asian stocks snapped a six-day winning run as optimism over China’s rescue measures faded. Shares in mainland China and Hong Kong dropped after the biggest three-day rally since 2022. In Asian trading Friday, Morgan Stanley cut its targets for major Chinese stock indexes, saying the country’s challenges with debt, demographics and deflation are among hurdles to further equity gains.
The selling of Hong Kong stocks extended in the afternoon, with companies including WuXi Biologics Cayman Inc. and WuXi Apptec leading losses. Traders cited the proposal of a bill by some US lawmakers that aims to ban WuXi AppTec, a Chinese medical technology company, and its units due to their ties to the Chinese Communist Party. WuXi AppTec tumbled as much as 32%, a record, and WuXi Biologics plunged up to 28%.
“Investors expect geopolitics between the US and China to intensify as the US gets nearer to this November’s election,” said Sze King Chong, portfolio manager at Kamet Capital Partners. “We expect more from both parties — especially from Republicans,” he said, as former President Donald Trump’s 2024 campaign manifestos have laid out key points regarding Sino-US trade.
- Volvo AB is gradually reducing production as the truckmaker brings output in line with normalizing demand following years of supply-chain disruptions that left manufacturers with record order banks.
- Intel Corp. tumbled in late trading after giving a disappointing forecast for the current period, signaling that it continues to struggle to defend its once-dominant position in data center chips.
- Alphabet Inc., Amazon.com Inc. and Microsoft Corp. must provide information to the US Federal Trade Commission on their investments and partnerships with artificial intelligence startups Anthropic PBC and OpenAI Inc. as part of an agency study announced Thursday.
- Apple Inc. is embarking on a historic overhaul of its iOS, Safari and App Store offerings in the European Union, aiming to placate regulators set to impose tough new antitrust rules.
Key events this week:
- US personal income/spending, PCE deflator, pending home sales, Friday
Some of the main moves in markets:
- The Stoxx Europe 600 rose 0.3% as of 8:27 a.m. London time
- S&P 500 futures fell 0.4%
- Nasdaq 100 futures fell 0.8%
- Futures on the Dow Jones Industrial Average fell 0.4%
- The MSCI Asia Pacific Index fell 0.8%
- The MSCI Emerging Markets Index fell 0.5%
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.2% to $1.0829
- The Japanese yen was little changed at 147.78 per dollar
- The offshore yuan fell 0.2% to 7.1913 per dollar
- The British pound fell 0.1% to $1.2692
- Bitcoin rose 0.5% to $40,113.81
- Ether fell 0.4% to $2,210.27
- The yield on 10-year Treasuries declined one basis point to 4.11%
- Germany’s 10-year yield declined three basis points to 2.26%
- Britain’s 10-year yield declined three basis points to 3.96%
- Brent crude fell 0.5% to $82.04 a barrel
- Spot gold was little changed