Europe’s STOXX 600 index closed flat on Friday, for its sixth straight weekly gain, as hopes of slowing interest rate hikes offset a real-estate sector sell-off and retailers were hurt by fears of a bumpy holiday shopping season.
The pan-European stock index hit a more than three-month high earlier this week.
Europe’s retail index fell 0.11 percent to 440.73 on Black Friday, which starts the shopping season, against the backdrop of a worsening cost-of-living crisis and distraction of the soccer World Cup.
Photo: Reuters
Real estate stocks slid 0.9 percent, after driving a market rally the previous session. UK housing stocks led the declines as a survey showed rental home demand in Britain rose last month as prospective first-time buyers put off purchases.
Still, the benchmark STOXX 600 gained 1.71 percent this week on signs that the US Federal Reserve could slow its interest-rate hikes and corporate earnings have turned out better than expected this season.
The index has rallied more than 15 percent since hitting a trough in late September, slightly outperforming a 13 percent climb in the S&P 500 from its lows last month.
“As we are about to enter 2023 and transition from inflation to disinflation, we think equities should face less pressure from the rates markets,” Emmanuel Cau, European equity strategist at Barclays, wrote in a note. “However, we caution against extrapolating the recent risk-on into the new year, amid a still unfavorable growth-policy trade-off and toppish market technicals.”
Investors on Thursday largely looked past minutes of the European Central Bank’s meeting last month that showed policymakers feared inflation might be getting entrenched and so rates would need to rise further.
Data on Friday showed that the German economy grew slightly more in the third quarter than preliminary figures had suggested, bolstered by consumer spending.
Among individual stocks, Credit Suisse slid 6.6 percent to a record low in the wake of capital raise plans and a weak earnings report released this week.
Rockwool gained 4 percent after Morgan Stanley raised its price target on the Danish stone-wool manufacturer’s stock.
The blue-chip FTSE 100 closed 0.27 percent higher at 7,486.67 and the domestically focused FTSE 250 midcap was mostly flat, gaining 0.03 percent to 19,545.70.
The indices logged weekly gains of 1.37 and 1.36 percent respectively on hopes of smaller rate hikes from the Fed and as worries about domestic politics eased.
Retail stocks slipped 0.5 percent on Black Friday.
Britons are to spend ￡8.7 billion (US$10.52 billion) over the weekend, research by GlobalData for VoucherCodes showed — up 0.8 percent year-on-year, but masking a big drop in volumes once inflation is accounted for.
Barclaycard Payments, which processes ￡1 in every ￡3 spent in the UK, recorded a 0.7 percent increase in the volume of payments versus last year.
Craig Erlam, senior market analyst at Oanda pointed out the effect of Black Friday for businesses.
“One thing that we going to learn from this is how well household spending is expected to keep up over the holiday period,” he said. “Retailers need to have a strong Black Friday because they need to use some hope. If we get more data which suggests that people are not spending, then that would be very worrying time.”
Energy stocks were a bright spot, gaining 1 percent on higher oil prices.
Real estate investment trusts fell the most during the day, while residential property services provider LSL Property Services was down 9.9 percent after flagging a bleak fiscal outlook for the year.
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