European Markets Rise Ahead of Key Eurozone Q2 GDP Data

  • Stock Market News
European Markets Rise Ahead of Key Eurozone Q2 GDP Data

By Scott Kanowsky -- European markets opened higher on Friday, as traders eyed a bevy of corporate earnings and key Eurozone growth data.

As of 03:55 EST (0755 GMT), the pan-European STOXX 600 rose 0.67% to 435.68, moving towards its best monthly performance since November 2020. The DAX in Germany traded up 0.77%, CAC 40 in France increased 0.74%, while the FTSE 100 in the U.K. was in the green marginally by 0.07%.

Stepping into the spotlight today will be the latest growth data out of the Eurozone, with investors have been fretting for large parts of this year over whether aggressive monetary tightening will lead to a global recession.

The region is expected to have grown slightly in the second quarter. Economists are calling for GDP to rise 0.2% on the quarter, a slowdown from the 0.6% quarterly growth in the first three-month period.

French GDP rose 0.5% on the quarter, ahead of the 0.2% growth expected, but there must still be risk to the downside, with European Central Bank Governing Council member Ignazio Visco warning on Thursday that there was the risk of a recession for the region.

Data on Thursday showed the U.S. economy contracted again in the second quarter, as the country’s gross domestic product fell at a 0.9% annualized rate last quarter, after a 1.6% contraction in the quarter before that.

Two consecutive quarters of negative growth is widely seen as the technical definition of a recession, but the U.S. does not adhere to that definition.

Additionally, China did not mention its full-year GDP growth target after a high-level Communist Party meeting, suggesting the target may prove hard to hit as the country continues to struggle with COVID-19 outbreaks and lockdowns.

Back in Europe, a parade of corporate earnings that have been a highlight of the week marched on.

Renault (EPA: RENA ) recorded a €1.36 billion ($1.39 billion) net loss in the first half of the year from the cost of closing its Russian business, but the French carmaker upgraded its full-year outlook because of improving profitability elsewhere. Shares in the company jumped by almost 6%, nearing the top of the STOXX 600.

Meanwhile, Air France KLM SA (EPA: AIRF ) shares zoomed up by almost 7% despite the airline downgrading its capacity forecast for the third quarter due to operational difficulties at airports.

French bank BNP Paribas SA (EPA: BNPP ) reported better than expected profits in the second quarter, lifting shares into the green, as bad loan provisions dipped despite the economic slowdown.

Standard Chartered PLC (LON: STAN ) shares rose more than 3% after first half pretax profit rose 19%, above market expectations. The emerging markets-focused lender benefited from rising interest rates and gave an upbeat outlook.

Signify NV (AS: LIGHT ) warned of a decline in its profit margins this year due to supply chain delays and negative foreign exchange impacts, sending shares down by around 8%.

Oil prices edged higher Friday, with attention turning to next week’s meeting of the Organization of Petroleum Exporting Countries and its allies, a group known as OPEC+, and its discussion of future production levels.

The members have now unwound the record 9.7 million barrels per day supply cut they agreed on in April 2020, when the COVID-19 pandemic slammed demand. It could be difficult for the group to boost supply significantly, given that many members are struggling to meet their current production quotas due to a lack of investment.

By 04:11 EST (0811 GMT), U.S. crude futures traded 2.04% higher at $98.39 a barrel, while the Brent contract rose 1.91% to $103.77.

Additionally, gold futures rose 0.65% to $1,761.70/oz, while EUR/USD traded 0.23% higher at 1.0220.

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