European stock markets experienced continued momentum on Friday, buoyed by optimistic outcomes from Cartier's parent company, Richemont, and increasing anticipation of interest rate reductions. The pan-European STOXX 600 index rose by 0.6%, reaching 523.19, positioning it for a fourth consecutive weekly gain.
Germany's DAX index increased by 0.8% and France's CAC 40 rose by 0.9%, benefiting from the decline in regional government bond yields amidst speculation of rate cuts by the Federal Reserve, the European Central Bank, and the Bank of England.
Federal Reserve Governor Christopher Waller commented to CNBC on Thursday that the U.S. central bank might implement several interest rate cuts this year, provided that inflation continues to decrease as projected. He mentioned the possibility of three or four quarter-percentage-point reductions this year, contingent on data trends, although fewer cuts might be considered if the economic data does not align.
Meanwhile, ECB Governing Council member Yannis Stournaras suggested on Thursday that the policy could entail a succession of rate cuts in upcoming meetings. Market participants are anticipating a 100-basis point cut from the ECB over the year.
The U.K.'s FTSE 100 saw an increase of over 1%, although the British pound weakened against other major currencies following unexpected declines in British retail sales in December, driven by reduced food store sales. Retail sales volumes fell by 0.3% month-over-month in December, contrasting November's revised 0.1% rise and defying expectations for a 0.4% increase. Annual retail sales rose by 3.6%, falling short of the 4.2% forecast, contributing to predictions of a Bank of England interest rate cut in the coming month.
The latest Eurozone inflation report is anticipated later today, following major European economies' consumer price data releases earlier in the week.
In corporate developments, Glencore shares surged nearly 3% and Rio Tinto gained 1.5% after reports indicated that both companies engaged in discussions last year regarding the potential merger of parts or all of their businesses. AstraZeneca’s shares increased by about 1% following the announcement that the FDA approved its drug Calquence (acalabrutinib) for the treatment of newly diagnosed mantle cell lymphoma (MCL) in adults ineligible for stem cell transplants.
Luxury stocks exposed to China showed restraint in Paris, with LVMH experiencing a near 1% decline. Despite China reporting strong growth in 2024, a range of weaker signals has prompted skepticism among some external economists.
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