European Stocks Largely Higher; PMI Data Points to Expansion

By Peter Nurse 

Investing.com - European stock markets traded largely higher Friday, continuing the strong gains from the previous session as solid economic data boosts optimism over the region’s outlook. 

At 3:50 AM ET (0850 GMT), the DAX in Germany traded 0.3% higher, the CAC 40 in France rose 0.4%, while the U.K.’s FTSE 100 dropped 0.4%, underperforming as a strong pound hits the performance of the index’s major exporters.

U.K. retail sales jumped 9.2% on the month in April, a substantial rise from the 5.1% increase the previous month, and indicative of consumers returning as Covid-19 restrictions are rolled back and shops gradually reopen. 

The Eurozone also received positive economic news as PMI data for Germany and France, remained firmly in expansion territory. Europe’s two largest economies reported a hefty rebound in services in May, driving their economic recoveries even as factories battled shortages and delays.

The major European indices had closed sharply higher Thursday--with the DAX climbing 1.7%, the CAC 40 gaining 1.3% and the FTSE 100 1%--as investor appetite for riskier assets returned.

Credit Suisse (SIX:CSGN) upgraded its investment stance on continental European equities to ‘overweight’ on Thursday, citing a catch-up in economic recovery, valuations and excess liquidity.

Helping the tone, the World Health Organization's regional director for Europe said the vaccines being used on the continent - from Pfizer/BioNTech, AstraZeneca (NASDAQ:AZN), Moderna (NASDAQ:MRNA) and Johnson & Johnson (NYSE:JNJ) - appeared able to protect against the current variants in circulation.

In corporate news, Richemont (SIX:CFR) stock jumped 5.5% after the luxury goods company proposed doubling its dividend, reflecting a 38% rise in net profit in its fiscal year 2020/21.

BMW (MI:BMW) stock rose 1.6% after the German automaker said it would have to set aside 1 billion euros ($1.2 billion), less than initially feared, for expected European antitrust fines for alleged collusion with rivals.

Lufthansa (DE:LHAG) stock fell 4.9% as the Thiele family, the second-largest shareholder in the German airline, sold more than half of its stake.

Oil prices edged lower Friday, continuing the recent selling as traders started to factor in the potential return of Iranian crude supplies.

Iran and world powers have been in talks since April on reviving the 2015 deal which limited Iran’s nuclear program. These talks appear to be making progress after Iran's president said the United States was ready to lift sanctions on his country's oil, banking and shipping sectors.

U.S. crude futures traded 0.3% lower at $61.74 a barrel, while the Brent contract fell 0.6% to $64.75. Both contracts are down around 5% this week and on track to post their biggest weekly loss since March.

Additionally, gold futures fell 0.2% to $1,877.70/oz, but are still on track for a third consecutive weekly rise, while EUR/USD traded 0.1% lower at 1.2218.

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