European stock markets commenced Friday’s trading session on a positive note, with major indices broadly higher as investors found solace in retreating bond yields and welcomed a batch of brighter-than-expected economic data from key regional economies.
This upbeat sentiment sets the stage for a potentially strong finish to the week.
Early trading saw the pan-European STOXX 600 index rise by 0.3% by 0721 GMT, putting it on course for an impressive sixth consecutive week of gains.
A significant contributor to this positive mood was encouraging economic news out of the United Kingdom.
The UK’s blue-chip FTSE 100 climbed 0.4% after official data revealed that British retail sales had jumped more than anticipated in April.
Adding to the positive economic picture, data showed that the German economy grew significantly more in the first quarter than previously estimated.
This upward revision was attributed to favorable economic developments in March, providing further evidence of resilience in Europe’s largest economy.
Consequently, the German DAX also advanced by 0.4%, trading just below its all-time highs.
This positive momentum comes after a week where stock markets had faced some selling pressure.
Soaring US Treasury yields, driven by concerns about the ballooning US debt, had previously unsettled investors.
Additionally, May business activity surveys had painted a somewhat gloomy picture of the eurozone economy.
However, a notable easing in benchmark 10-year US and European government bond yields on Friday appeared to alleviate some of these concerns, providing a more supportive backdrop for equities.
Corporate movers: AJ Bell jumps, Michelin upgraded
Among individual stocks making headlines, British investment platform AJ Bell saw its shares surge by an impressive 9.8%.
This significant jump followed the company’s announcement of a 12% year-over-year rise in its half-yearly profit before tax, a result attributed to increased client activity.
French tyre manufacturer Michelin also enjoyed a positive session, with its shares rising 0.9%.
The advance came after Jefferies upgraded the company’s stock to a “buy” rating, citing growth potential in its earnings.
Delving deeper into the UK economic data, retail sales rose by an estimated 1.2% in April on a monthly basis, according to figures released by Britain’s Office for National Statistics on Friday.
This print significantly exceeded the 0.2% month-on-month rise anticipated by analysts polled by Reuters.
The April figures marked a notable recovery from the previous month, when retail sales had risen by a more modest 0.1% month-on-month.
It’s worth noting that the March figure was revised down from an initial preliminary estimate of 0.4% growth in sales volumes.
The ONS attributed the robust April growth partly to strong food store sales, which were up 3.9% on a monthly basis, a performance that retailers linked to favorable weather conditions throughout the month.
Global market context and data watch
The positive sentiment in Europe found some support from overnight developments in Asia, where stock markets were gripped by broadly positive momentum.
This was partly attributed to an agreement between the US and China to keep communication channels open following a call between top officials from both countries.
On Wall Street, stock futures were little changed as investors continued to monitor the elevated levels of US Treasury yields.
Looking ahead, investors will be closely monitoring further economic data releases from the European region.
Figures due out include updates on UK consumer confidence, alongside the already released retail sales.
French consumer confidence data is also on the agenda, as is a final print on Germany’s first-quarter economic growth.
On the earnings front, it’s a relatively quieter day, though British Land and AJ Bell were set to update shareholders on their financial performance.
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