Global Markets
European stocks close lower and head for a weekly loss as French unrest and oil weigh; Safran sinks 10%
The STOXX 600 slipped 0.31% on Friday as aerospace and luxury names fell, while oil majors, L'Oréal and Sodexo rose, with Moody's due to review France's rating.
HedgeWeekly News Desk ·
European shares ended Friday lower, with the STOXX 600 down 0.31% and on course for a weekly loss of more than 1% after Thursday's steepest drop in three weeks. Germany's DAX fell 0.75%, France's CAC 40 lost 0.36% and London's FTSE 100 shed 0.32%, as higher oil prices, weak October PMI data and worries over French debt and AI returns weighed.
Aerospace led the fallers. Safran dropped 10% even though third-quarter revenue growth beat forecasts, on concern that aftermarket growth is slowing, and MTU Aero Engines fell nearly 5%. Rolls-Royce slid 7.6% after reports it was close to a deal for up to £200 million in UK government support for a new short-haul engine. Hermès lost nearly 4% on its quarterly results. On the other side, Sodexo rose 7% on stronger full-year revenue, L'Oréal gained 5.7% on third-quarter sales, Holcim added about 5% after raising its full-year forecast, and BP, Shell and TotalEnergies rose 3.7% to 4.4% with crude.
France remained the focal point. Riots and looting led to curfews in parts of Paris, Lille and Nice earlier in the week, nationwide protests are planned for Saturday with troops reinforcing police, and the unrest is tied to a budget standoff. France's 10-year yield briefly topped 5% on Wednesday for the first time since 2002, and the country's composite flash PMI fell to 48.4 in October from 51.1, signalling contraction.
For allocators, the week's swing points to a widening gap between Europe's earnings and its macro risk. Analysts now expect third-quarter STOXX 600 earnings to grow 21.9%, according to LSEG I/B/E/S data, largely on energy, yet indexes fell. Moody's was due to review France's credit rating later on Friday, and Capital Economics expects the premium on French bonds over the rest of the euro zone to widen further. Next comes the ECB decision on October 29, where markets price a more than 90% chance of a hold after two hikes this year.