June 28 2024: European stock markets traded mostly higher on Friday, ending the week positively as investors digested regional economic data and the political climate ahead of key U.S. inflation numbers.
At 03:25 ET (07:25 GMT), Germany’s DAX index was up 0.3% and the UK’s FTSE 100 climbed 0.4%, while France’s CAC 40 fell 0.4%.
UK Economy Grew More Than Expected in Q1
European equities were boosted by news that Britain’s economy grew 0.7% in the first quarter of this year compared to the previous quarter, exceeding the initial estimate of 0.6% growth. This data confirms that Britain’s economy exited a shallow recession at the start of 2024. Although overall growth remained weak, with first-quarter GDP just 0.3% higher than a year earlier, it was still above the initial estimate of 0.2%.
French inflation grew 2.1% annually in June, down from 2.3% the previous week, while Spanish inflation rose 3.4%, down from 3.6%.
Investors are likely to remain cautious ahead of the release of the monthly U.S. PCE reading later in the session, the Federal Reserve’s preferred inflation measure. Fed officials have repeatedly called for more data to confirm that inflation has been tamed before considering easing monetary policy.
Political Uncertainty
Sunday sees the first round of the parliamentary election in France. An opinion poll published in Les Echos on Friday indicated that the far-right party National Rally could reach up to 37% of the popular vote, up by 2% from the previous week. President Emmanuel Macron’s centrist bloc Together was seen reaching 20%, while the New Popular Front left-wing alliance had 28% of the vote.
In the U.S., President Joe Biden and his Republican rival Donald Trump debated on Thursday night, providing voters the opportunity to judge the two oldest candidates ever to seek the presidency.
Nike Offers Weak Outlook
In the corporate sector, sentiment was hit by sportswear giant Nike (NYSE) forecasting a surprise drop in fiscal 2025 revenue, affected by faltering demand for its sneakers.
There was some good news, as global mergers and acquisitions activity grew at a sluggish pace in the second quarter, but dealmakers are reasonably confident transactions will pick up in the second half of 2024. The number of deals signed globally in the second quarter fell 21% to 7,949, according to Dealogic, while deal volumes grew 3.7% to $769.1 billion.
Crude on Course for Strong Weekly Gains
Crude prices rose on Friday, set for their third consecutive winning week as fears of supply disruptions in Russia and the Middle East largely offset concerns over slowing demand. By 03:25 ET, U.S. crude futures (WTI) traded 0.9% higher at $82.47 per barrel, while the Brent contract climbed 0.7% to $85.89 per barrel. Brent and WTI futures have gained nearly 2% so far this week, with both benchmarks also on track for gains of around 6% in June.
Fears of a wider war between Israel and Lebanon’s Hezbollah kept markets on edge over potential disruptions in crude supplies, while attacks by Ukraine on major Russian fuel refineries also pointed to possible disruptions in oil supplies from Moscow. These geopolitical conflicts saw traders attaching a higher risk premium to oil prices, overshadowing a jump in U.S. crude oil stocks, which raised concerns about slowing U.S. fuel demand amid persistent inflation and high interest rates.
