European stocks were searching for firm direction Friday, failing to follow U.S. stocks higher as traders waded through a stream of corporate updates.
Traders will likely focus on comments from U.S. Federal Reserve speakers later, after hints of a faster pace of U.S. interest rate rises earlier this week helped drive up bond yields.
How markets are trading
Shifting between small gains and losses, the Stoxx Europe 600 index SXXP, -0.17% fell 0.1% to 380.02. Only the telecom and utility groups were moving higher. The health care and tech sectors were down the most. On Thursday, the benchmark fell 0.2%.
The U.K.’s FTSE 100 UKX, -0.31% was off 0.4% to 7,252.39, and Germany’s DAX 30 index DAX, -0.13% slipped 0.1% to 12,453.78.
France’s CAC 40 PX1, -0.25% was down 0.1% at 5,304.33, and Italy’s FTSE MIB I945, -0.08% rose 0.3% to 22,534.09.
The euro EURUSD, -0.3000% bought $1.2317, up from $1.2332 late Thursday in New York.
The yield on the 10-year German bond TMBMKDE-10Y, -4.34% fell 2 basis points to 0.70%, according to Tradeweb. Yields fall when prices rise.
What’s driving markets
Corporate earnings were in focus at the end of the last full week in February. The Stoxx 600 is on track early Friday for a fractional rise, so the session should determine whether the pan-European benchmark logs a weekly gain or decline. Last week, the index jumped 3.3% after a run of three weekly losses.
European equities this week have largely followed moves on Wall Street. Analysts have said the recent global rout in stocks stemmed largely from concerns that a quickening pace of U.S. inflation could prompt the Fed to raise interest rates more than anticipated this year.
U.S. stock futures were rising Friday, after the S&P 500 SPX, +0.10% and the Dow Jones Industrial Average DJIA, +0.66% finished Thursday with gains.
Traders will look to comments from the several Fed officials lined up to appear Friday for more clues to the central bank’s thinking on interest rates. New York Fed President William Dudley is among those speaking during European trading hours.
What strategists are saying
“Fears revolving around rising inflationary pressures and rate hike jitters have certainly left investors skittish this trading week. Investors seem to be on edge about higher interest rates and as such, this continues to encourage global equity bulls and bears to engage in a tough tug of war,” said Lukman Otunuga, research analyst at FXTM.
“With investors on guard as global stock markets become increasingly sensitive to the prospect of rising inflation and interest rates, equity bears could steal the show,” he said in a note.
Stock movers
Royal Bank of Scotland Group PLC RBS, -4.43% RBS, +1.28% shares dropped 4.5% as the majority state-owned lender posted its first full-year profit in 10 years. However, RBS said it has yet to agree a settlement with the U.S. Department of Justice over alleged mis-selling of mortgage-backed securities.
Phoenix Group Holdings shares PHNX, +5.07% jumped 5.3% after the insurer said it bought Standard Life Assurance Ltd. from Standard Life Aberdeen PLC in a reverse takeover for £2.93 billion ($4.09 billion). Shares of Standard Life Aberdeen SLA, +2.10% were up 2.1%.
Deutsche Telekom AG DTE, +2.54% shares were up 3%. The German telecommunications company said late Thursday it had returned to profit in the fourth quarter of 2017, largely boosted by the effects of U.S. tax reform.
Swiss Re SREN, +1.28% rose 2.4% after the reinsurance heavyweight said it’s not considering issuing new capital. The company did say it’s “carefully assessing” the implications of a deal with SoftBank Group Corp. 9984, +1.38% , and it reported a fall in net profit in 2017.
Valeo SA FR, -9.76% tumbled 9%. The French automotive supplier said late Thursday its 2017 net profit fell year-on-year, despite both sales and order intake increasing.
International Consolidated Airlines Group SA shares IAG, -4.56% ICAGY, +1.29% fell 4.3%. The British Airways parent said it was engaging a €500 million share-buyback program, and that pretax profit rose in 2017. The results were “mixed,” said Accendo Markets, with revenues in line. while adjusted per-share earnings of €1.02 fell short of a €1.06 consensus estimate.
Economic data
Economic activity in Germany toward the end of 2017, but a booming export sector kept Europe’s largest economy on a solid growth path, according to new data. Germany’s Federal Statistical Office said gross domestic product grew 0.6%, or an annualized rate of 2.5%, in the fourth quarter, easing somewhat toward the end of 2017. The report confirmed preliminary figures.
Eurostat confirmed that eurozone inflation was at 1.3% in January, down from 1.4% in December.