European shares advanced on Friday, marking a second consecutive week of gains driven by optimistic investor sentiment and positive earnings reports, amidst expectations of a Federal Reserve interest rate cut in September.
The pan-European STOXX 600 index closed nearly 0.9% higher, reaching its highest level in over a month intraday. Similarly, the euro zone blue-chip gauge rose 1.3%, also hitting a one-month high.
Sweden’s Addtech surged 16% to a record high after forecasting favorable outlooks for upcoming quarters.
Ericsson, the Swedish telecom giant, saw a 4.3% increase following better-than-expected profits and sales in North America.
The Swedish benchmark index climbed 2.2%, buoyed by these strong performances.
Norwegian Air jumped 7.8% despite slightly reduced demand affecting ticket prices, as it reported second-quarter core earnings that exceeded market expectations.
“While a robust Q2 reporting season could provide further near-term support for STOXX 600 EPS momentum, we expect this to give way to renewed downgrades as global growth momentum weakens,” strategists at BofA Global Research noted in a statement, citing the impact of monetary tightening and reduced US fiscal stimulus.
In the United States, earnings season commenced with major banks like JPMorgan Chase, Wells Fargo, and Citigroup reporting their second-quarter results.
France’s CAC 40 index advanced 1.3% following a volatile week of elections and ongoing discussions among left-wing leaders about potential prime ministerial candidates.
Meanwhile, French consumer prices rose 2.5% year-on-year in June, consistent with initial estimates, while German wholesale prices declined by 0.6% year-on-year for the same period.
Investor sentiment remained positive amid expectations of a September Fed rate cut, bolstered by data showing a surprising drop in US consumer prices on Thursday, despite higher-than-expected producer prices in June.
Among notable movements, EMS Chemie slipped 4.9% after cutting its 2024 sales guidance, while Axfood dropped 9.0% on the STOXX 600, impacted by operational disruptions and logistics restructuring affecting quarterly earnings.
Aker BP, partially owned by BP, reported lower-than-expected second-quarter profits and revised down its full-year output outlook, yet saw its shares rise 3% amidst broader market optimism.
Overall, European markets closed the week on a positive note, driven by strong corporate performances and supportive global economic indicators.