European Stocks Higher; Sentiment Improves as Investors Digest New Sanctions
By Peter Nurse
Investing.com - European stock markets traded higher Friday, bouncing from the previous session’s hefty losses, as investors digest the potential long-term impact of the new Western sanctions on Russia, as well as German growth data and more corporate earnings.
By 3:45 AM ET (0845 GMT), the DAX in Germany traded 0.3% higher, the CAC 40 in France climbed 0.5% while the U.K.’s FTSE 100 rose 1.2%.
European equity markets closed sharply lower Thursday, after Russian President Vladimir Putin authorized an all-out invasion of its southern neighbor, unleashing troops, tanks and missiles on Ukraine.
U.S. stocks on Wall Street also fell initially, but enjoyed a dramatic reversal late in the day as U.S. President Joe Biden unveiled new sanctions, along with his G-7 allies, targeting Russia's ability to do business in the world's major currencies, along with measures against banks and state-owned enterprises.
However, the new measures stopped short of disconnecting Russia from the SWIFT international banking system or targeting its oil and gas exports, moves which could have had severe repercussions on Western economies just as they are recovering from the damage caused by the COVID-19 pandemic.
Helping Friday’s positive tone was the release of the latest reading of German growth data. This showed the Eurozone’s largest economy shrank less than initially reported at the end of last year, as output declined 0.3% in the fourth quarter, compared with a preliminary reading of -0.7%.
In the corporate sector, the travel stocks rebounded after Thursday’s strong selloff, with British Airways owner IAG (LON: ICAG ) stock up 2.2% as the group expects to return to profit this year. CEO Luis Gallego confirmed the airline is now avoiding Russian airspace and has canceled its flight to Moscow.
German chemicals giant BASF (DE: BASFN ) stock down 4.1% after it forecast a decline in 2022 operating earnings as its supply chain remains vulnerable to disruptions.
Swiss Re (SIX: SRENH ) stock slumped 5.7% after the reinsurer reported a smaller-than-expected full-year profit in 2021, suffering from big claims from natural disasters, while Valeo (PA: VLOF ) stock fell 4% after the French car parts maker warned its business continued to be impacted by chip shortages.
Pearson (LON: PSON ) stock soared over 8% after the education group said it would launch a 350 million pound ($470 million) share buyback after hitting 2021 targets.
Holcim (SIX: HOLN ) stock rose 2.1% after the world's biggest cement maker reported better-than-expected fourth quarter operating profit, expecting growth momentum to continue in all regions this year.
Oil prices climbed Friday with the new sanctions on Russia, levied by the U.S. and Western allies after its invasion of Ukraine, raising fears that global energy supplies will be disrupted.
Although an U.S. official was quoted as saying its measures "are not targeting and will not target oil and gas flows," the sanctions on Russia’s banks and state-owned enterprises are likely to impede the country’s ability to do business in major currencies.
By 3:45 AM ET, U.S. crude futures traded 1.4% higher at $94.12 a barrel, while the Brent Oil Futures rose 1.6% to $96.94, after having surged to more than $100 a barrel for the first time since 2014 on Thursday.
Additionally, Gold Futures fell 0.6% to $1,914.20/oz, while EUR/USD traded 0.1% lower at 1.1178.
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