Investing.com – European stock markets saw slight gains on Friday, maintaining the optimistic atmosphere observed on Wall Street. Investors were processing a series of corporate earnings reports along with the most recent economic activity data.
As of 03:05 ET (08:05 GMT), the German index rose by 0.2%, France’s index increased by 0.9%, and the UK’s index climbed by 0.2%.
European markets have been buoyed by positive signals from Wall Street, where the benchmark index reached a new all-time high. This surge followed comments from President Donald Trump at the World Economic Forum in Davos, Switzerland, where he advocated for lower interest rates from the Federal Reserve.
Upcoming Eurozone PMIs
Attention in Europe is now turning to the upcoming release of the latest regional economic activity indicators, including British and European PMI figures expected later in the day.
While services are anticipated to outperform manufacturing across the region, the overall PMI is likely to indicate that activity remains in contraction territory.
This scenario could give the European Central Bank further motivation to reduce interest rates at its meeting next week.
Analysts broadly predict that the ECB will cut rates by 25 basis points in its upcoming policy meeting, following four previous rate cuts aimed at addressing sluggish growth and easing inflation within the eurozone.
In contrast, the U.S. Federal Reserve raised interest rates by 25 basis points to approximately 0.5% earlier on Friday, marking its third hike since it began to unwind its extremely accommodative monetary policy at the start of 2024.
Cautious Q4 Earnings Outlook
The European earnings season is gearing up, with expectations set relatively low, as analysts forecast average earnings growth of around 1.5% for the fourth quarter compared to last year.
Nevertheless, this would represent the third consecutive quarter of growth, with anticipations of both profit and sales increases for the first time since Q1 2023.
Burberry (LON:) shares gained over 3% after the British luxury brand reported a smaller-than-expected 4% decline in comparable store sales for the third quarter ending December, outperforming market predictions of a 12% drop due to strong holiday demand in the Americas.
Burberry also indicated a greater likelihood of avoiding a full-year operating loss, having experienced such a loss in the first half of the year.
Rolls-Royce (OTC:) saw its stock rise 2% after the engineering firm announced it secured its largest defense contract to date—a £9 billion deal awarded by the UK Ministry of Defence to manage the development and support of nuclear reactors for the Royal Navy’s submarine fleet.
Conversely, Ericsson (BS:) shares fell nearly 9% following its failure to meet analysts’ expectations for fourth-quarter performance, as the anticipated sales rebound in India did not occur.
Signify (AS:), the world’s largest lighting manufacturer, reported a more pronounced drop in its full-year core profit than anticipated, leading to the announcement that CEO Eric Rondolat will step down after the annual general meeting in April. Its shares declined by 2.6%.
Oil Prices Facing Significant Weekly Losses
Oil prices stabilized on Friday but were headed for a significant weekly decline, following President Trump’s calls for lower crude prices and increased energy production in the U.S.
As of 03:05 ET, U.S. crude futures (WTI) were down 0.1% at $74.58 per barrel, while the Brent contract slipped 0.1% to $78.27 per barrel.
Both benchmarks were over 3% lower for the week—their worst performance since November—after Trump signed an executive order promoting higher U.S. oil production and reducing certain climate-related regulations on the energy sector.
Additionally, during his Thursday speech at the World Economic Forum in Davos, Switzerland, Trump urged Saudi Arabia and OPEC member countries to lower oil prices.
Uncertainty regarding his potential trade tariffs against major economies, which could disrupt global trade and negatively impact oil demand, has also contributed to market pressures.
