FRANKFURT: European stocks reversed early losses and ended Friday at more than a one-week high as investors shifted their focus to updates on China’s stimulus plans, corporate earnings and an interest rate decision by the European Central Bank.
The continent-wide STOXX 600 index ended up 0.5%, and was on track for weekly gains of 0.6%.
Markets closed a volatile week that saw Shanghai markets drop on uncertainty around policy support, oil prices spike on Middle East tensions and US data raise doubts about sustained cooling of inflation.
Britain’s FTSE 100 edged up 0.2%, while Germany’s DAX and Spain’s IBEX closed up 0.7% and 0.5% respectively.
“We’re now in that limbo phase where economies are not expecting to plunge into recession, rates are still high, there’s no clear path on interest rate cuts and earnings have been resilient, but again the expectations were pretty low,” said Daniela Sabin Hathorn, senior market analyst at Capital.com.
France’s blue-chip CAC 40 reversed early losses and ended higher after the government delivered its 2025 budget with plans for 60 billion euros ($65.5 billion) worth of spending cuts and tax hikes on the wealthy and big companies.
Ratings agency Fitch is scheduled to update its view on France’s debt later in the day.
“These effects are going to have an impact, but as always, we tend to see that the actual application tends to be a bit more uneven than expected,” Hathorn said.
Overall, there was a sense of caution as investors awaited China finance ministry’s press conference on Saturday, with expectations of stimulus announcements running high.
European markets closed lower on Thursday after data showed US inflation rose slightly more than expected in September, firming bets for a rate reduction of 25 bps.
The European Central Bank will meet on Oct. 17, and a rate cut is almost fully priced in, with a December move also firmly expected.
Among single stocks, Chrysler parent Stellantis fell 2.8% as the company confirmed that CEO Carlos Tavares would retire at the end of his contract in early 2026.
Sainsbury’s dropped 5.9% after the Qatar Investment Authority, the biggest shareholder in the British supermarket group, sold shares worth 306 million pounds ($399.88 million).
Volkswagen lost 0.7% after reporting a decline in third-quarter global deliveries, following which Moody’s cut its outlook on the carmaker to “negative” from “stable”.
Valmet slid 7.7% to the bottom of the STOXX index after lowering its full year expectations.
Attention will squarely be on earnings reports from ASML, Nordea Bank, Nokia, Sartorius and Volvo among others in the following week.