European stocks on Friday finished with their strongest weekly gain in more than four months, with Carrefour’s shares surging as the French retailer added to a batch of better-than-expected earnings reports that have helped push regional equities to a six-week high.
How markets performed
The Stoxx Europe 600 index SXXP, +0.40% closed up 0.4% at 392.08, its highest finish since June 14, FactSet data show. All but the technology sector ended higher, and the telecommunications sector paced advancers.
For the week, the pan-European benchmark rose 1.7%, the best weekly rise since March 9 when the index surged 3.1%.
Germany’s DAX 30 index DAX, +0.40% closed with a gain of 0.4% at 12,860.40, and France’s CAC 40 index PX1, +0.57% rose 0.6% to 5,511.76. On Friday, French second-quarter GDP growth of 0.1% missed expectations. The DAX 40 and the CAC also marked their best weeks since early March by bulking up 2.4% and 2.1%, respectively,
Spain’s IBEX 35 IBEX, +0.90% jumped 0.9% to 9,867.90, and the U.K.’s FTSE 100 index UKX, +0.50% closed 0.5% higher at 7,701.31.
The euro EURUSD, +0.1031% turned higher against the U.S. dollar, trading at $1.1654 compared with $1.1644 late Thursday in New York, following U.S. economic data that included the first look at second-quarter growth.
What drove markets
European stocks extended Thursday’s climb that took German stocks to a five-week high. Those moves came after European Commission President Jean-Claude Juncker and U.S. President Donald Trump said they would work on tamping down trade-related tensions between the U.S. and the European Union. The two said they’ll move toward “zero tariffs” and “zero subsidies on non-auto industrial goods,” among other actions.
Investors on Friday sifted through a new batch of earnings reports that included stronger-than-expected operating profit at French supermarket chain operator Carrefour SA. Its report spurred the biggest percentage leap in the company’s shares since February 1999, according to FactSet data.
The busy week of earnings reports and developments on the trade front was capped by the first reading of second-quarter GDP for the U.S. The world’s largest economy expanded by 4.1%, slightly below average economists’ estimates for 4.2% but the fastest pace in nearly four years. After that report, the University of Michigan’s consumer sentiment index fell in July to a six-month low.
What are strategists saying?
“With around 40% of market cap having reported second-quarter results, European [per-share earnings] growth has accelerated to 6% year-over-year, up from 0% in Q1,” said Tom Pearce, European equity strategist at UBS, in a note published Friday.
“This is in line with the consensus expectations for the companies that have reported, which is a good result, given that the sharp deterioration in euro area growth momentum in Q2 pointed to the risk of a downside surprise. The breadth of surprises has been weak, however, with the gross beat ratio, at 44%, the lowest in at least eight years,” said Pearce.
Stock movers
Carrefour shares CA, +12.01% surged 11.6% as the French supermarket retailer said it’s first-half operating profit came in at €597 million, ahead of the €538.7 million expected in a FactSet consensus survey. The company, which has been engaged in a reorganization, said it plans to reach its targets for 2020 and 2022.
SBM Offshore NV SBMO, +9.64% bounced 9.6% higher after the Dutch oil-and-gas services company reached a leniency agreement with Brazilian authorities and the state oil company, Petrobras PETR3, +2.22% PBR, +2.76% SBM last year signed a deferred prosecution agreement with U.S. authorities, agreeing to settle charges of bribing officials in five countries, including Brazil.
Kering shares KER, -7.72% sank 7.7% as the company behind fashion houses Gucci and Bottega Veneta posted first-half revenue €6.43 billion, short of the €7.01 billion expected in a FactSet survey of analysts. Net profit climbed to €2.36 billion euros ($2.76 billion) from €825.8 million a year ago.
Reckitt Benckiser Group PLC shares RB., +7.91% shot up 7.9% after the maker of Clearasil, Vanish and other consumer-goods brands posted a 9.5% rise in first-half pretax profit and raised its revenue-growth target.
Banco de Sabadell SA SAB, -2.99% fell 3%, with the Spanish lender swinging to a second-quarter loss of €138.7 million, hurt by costs at its U.K. subsidiary TSB Bank following a technology-platform migration.
BT Group PLC shares BT.A, +4.96% rallied 5% as the British telecommunications company said first-quarter pretax profit surged 68% to £704 million ($926.7 million), and that it was backing its full-year guidance.
BHP Billiton Ltd. shares BLT, +2.04% climbed 2% after the company reached a deal to sell the bulk of its U.S. onshore oil-and-gas unit for $10.5 billion to BP, allowing the world’s largest miner by revenue to exit what’s been a costly investment. BP shares turned higher, closing up by 0.5%.
