Jamie Spencer
European stocks climbed on Friday, buoyed by gains in most sectors despite a mixed bag of regional economic data. While healthcare and retail sectors led the charge, banking stocks lagged, and currency markets reflected uncertainties across Europe.
Stoxx 600 Rallies, Led by Healthcare and Retail
The pan-European Stoxx 600 index rose 1.2% by mid-afternoon in London, with nearly all sectors posting gains. Healthcare and retail stocks emerged as the top performers, each climbing over 2%. However, Europe’s banking index bucked the trend, slipping 2% as cautious sentiment persisted in the financial sector.
U.K. Retail Sales and the Pound’s Decline
In the U.K., retail sales data from October disappointed markets. The Office for National Statistics reported a 0.7% month-on-month decline in retail sales volumes, far below economists’ expectations of a 0.3% drop. This weak performance sent the pound to a six-month low against the U.S. dollar, trading lower as investors priced in the potential for looser monetary policy.
Despite the downbeat data, London’s FTSE 100 surged 1.4%, reflecting optimism that weak retail sales and subdued business activity could prompt the Bank of England (BOE) to cut interest rates more aggressively in the coming year. While markets expect the BOE to hold rates steady in December, a cumulative 75 basis-point reduction from the current 4.75% rate is fully priced in by the end of 2025.
Euro Zone PMI Data Sends Euro Lower
The euro dropped against the dollar, trading at $1.0409, after flash PMI data revealed a sharp contraction in euro zone business activity. S&P Global’s HCOB composite Purchasing Managers’ Index fell to 48.1 in November, down from 50.0 in October and below market expectations. This marked the lowest reading since the pandemic’s early months, signaling mounting economic challenges for the region.
Germany, Europe’s largest economy, showed modest resilience. Data released Friday indicated 0.1% GDP growth in the third quarter compared to the previous three months, slightly lower than an initial 0.2% estimate.
Gold Shines Amid Global Uncertainty
Gold prices extended their upward trajectory on Friday, poised for their best weekly performance in a year. Concerns over global conflicts and economic uncertainty have driven investors to the safe-haven asset, underscoring its appeal during periods of volatility.
Broader Market Trends: Asia and U.S.
Asia-Pacific markets followed Wall Street’s positive momentum, with most regional indexes closing higher. In the U.S., stocks were up during morning trading, continuing a week of solid gains that saw the S&P 500 logging its fourth consecutive positive session.
Closing Thoughts
European stocks ended the week on a high note, reflecting optimism in most sectors despite mixed economic signals. Weak retail sales in the U.K. and declining euro zone business activity weighed on currencies but spurred hopes for more accommodative monetary policies. As global markets remain sensitive to economic data and geopolitical risks, investors are recalibrating their strategies to navigate this evolving landscape.
