Most European stocks ended a choppy session higher on Friday, getting a boost from the U.S. where the main indexes rallied after better-than-expected labor market data.
German stocks, however, trailed the rest of Europe after data on the country’s exports and factory output indicated a slow start in activity at the start of 2018.
How are markets moving?
The Stoxx Europe 600 index SXXP, +0.43% rose 0.4% to close at 378.24, after darting in and out of negative territory during the session. For the week, the benchmark rose 3.1%.
Germany’s DAX 30 index DAX, -0.07% fell 0.1% to 12,346.68, eating into Thursday’s gain of 0.9%. But the index rose 3.6% for the week, marking its best week since December 2016, according to FactSet data.
France’s CAC 40 index PX1, +0.39% turned up 0.4% to end at 5,274.40, and the U.K.’s FTSE 100 index UKX, +0.30% ended 0.3% higher at 7,224.51.
The euro EURUSD, -0.0487% bought $1.2329, up from $1.2313 late Thursday in New York.
What’s driving the market?
European benchmarks hit their highest levels of the session after data showed the U.S. economy added 313,000 new jobs in February, blowing out expectations of 222,000 in a MarketWatch poll of economists. February’s figure signaled that the U.S. economy has room to keep expanding, and the U.S. is a key business and consumer market for many European companies.
However, wage growth moderated, and that could tamp down worries among investors that rising pay will lead to higher inflation and prompt the Federal Reserve to raise interest rates more than the market has anticipated. A slower pace of Fed hikes is seen as good for the stock market.
U.S. stocks SPX, +1.74% DJIA, +1.77% swung firmly higher after the report.
But still hanging over Europe was the prospect for a trade war that could be spurred by U.S. President Donald Trump’s decree signed late Thursday to impose tariffs of 25% on imported steel and 10% on aluminum. Canada and Mexico were exempted from the levies as the U.S. attempts to renegotiate the North American Free Trade Agreement.
“We hope we can get confirmation that the EU is excluded from this,” said European Union Trade Commissioner Cecilia Malmstrom on Friday at a forum in Brussels. The tariffs will go into effect March 23. While the EU shares concerns about overcapacity in the steel market, “this isn’t the right way” to deal with the issue, she said.
In other geopolitical developments, Trump accepted an invitation to meet North Korean leader Kim Jong Un, the White House said late Thursday. South Korea’s national-security adviser said Kim reaffirmed that he’s prepared to suspend nuclear and missile tests while North Korea engages in talks.
What strategists are saying
“U.S. markets have sprinted higher in the wake of an NFP report that may be justifiably described as a ‘Goldilocks’ update, one that harks back to the easy days of 2017. Jobs are being created at a high rate, which suggests plenty of slack in the US economy, while wages are not growing as fast as previously thought,” said Chris Beauchamp, chief market analyst at IG, in a note.
“Thus, fears of the Fed moving into higher gear with tightening have receded this afternoon, capping gains in the dollar and causing stocks to rocket. It feels like a return to the good old days, particularly when investors have just come through an ECB meeting that reiterated a commitment to loose policy,” he added.
Which stocks were in focus?
Shares of steelmaker ArcelorMittal SA MT, -0.64% fell 0.6% in the wake of Trump’s tariff action.
Inmarsat PLC ISAT, -6.73% fell 6.7% after the U.K. satellite operator slashed its final dividend to 12 U.S. cents a share and warned that cash payments from its collaboration with Ligado Networks LLC beyond the end of 2018 are in doubt.
Deutsche Lufthansa AG LHA, -5.14% lost 5.6% after the airline released traffic numbers for February.
GVC Holdings PLC GVC, +5.00% climbed 5% as the online gambling company said its pretax loss for 2017 narrowed on the back of higher gaming revenue and margins.
Economic data
German exports fell by 0.5% in seasonally adjusted terms, the sharpest decline in exports since last June, said the Destatis statistics agency.
German factory orders declined 0.1% in January on the month, missing expectations of a 0.4% gain in a survey of analysts polled by The Wall Street Journal.
French industrial production fell sharply and unexpectedly in January, by 2%, on declines in energy and manufacturing output, statistics agency Insee said Friday.
