FX.co ★ European stock market closes the week on the positive

The key exchange indicators of Western Europe showed steady growth on Friday. Market participants are analyzing strong macroeconomic data from the UK and the United States. Additional support for key indicators of European stock exchanges is provided by the rise in securities of the health sector, as well as tourism and recreation.

Thus, by the time of writing, the composite index of the leading companies in Europe STOXX Europe 600 increased by 0.26% - up to 441.29 points. The highest results among the components of the index show the securities of the Irish betting company Flutter Entertainment PLC, which soared by 11.9%

Meanwhile, the French CAC 40 rose 0.24%, the German DAX gained 0.46% and the UK FTSE 100 climbed 0.4%.

Rising and Falling LeadersThe value of securities of the British-Dutch oil and gas giant Shell rose by 0.9%. Earlier, the company suspended production at some platforms in the Gulf of Mexico due to pipeline leaks, but Shell promised to finish their repairs on Friday.

German telecommunications company Deutsche Telekom AG sank 0.7%. In the second quarter of fiscal 2022, the telecoms giant's net income declined by 22%.

At the same time, the company improved its annual adjusted earnings forecast for the second time in a year due to the good performance of the American wireless operator T-Mobile US, Inc., owned by the German Deutsche Telekom AG. On Friday, the company confirmed plans to increase its stake in T-Mobile US and said it will soon acquire a majority stake in it.

The market capitalization of Irish betting holding Flutter Entertainment PLC jumped 11.9%. The day before, the company's management said that it expects the situation to improve in the second half of 2022 after a 20% decline in net profit in January-June.

Swiss drugmaker Roche Holding AG rose 1.1%. On Friday, the company received US Food and Drug Administration approval for a new pediatric drug, Xofluza.

Market Sentiment

European investors were focused on the next batch of quarterly reports of the leading companies in the region, as well as the previously released US inflation data for July.

On Wednesday, the US Department of Labor published a report on the consumer price index, according to which annual inflation in the country slowed to 8.5% in July. The current slowdown was the first in the past five months of 2022.

Previously, market analysts said that the annual inflation rate in the country will decrease to only 8.7% in July from 9.1% in June (the highest since 1981).

Traditionally, a decline in inflation is a clear signal to the US Federal Reserve about the need for a less dramatic increase in base interest rates going forward. The day before, the analysts immediately lowered their forecast for the rate. According to the largest North American financial derivatives market CME Group, now 61.5% of analysts expect this indicator to rise by 50 basis points in the September meeting.

At the same time, most experts earlier predicted its third consecutive increase of 75 basis points.

However, some representatives of the Fed have already rushed to say that the central bank does not plan to ease monetary policy in the near future.

A day prior, Neil Kashkari - the head of the Federal Reserve Bank of Minneapolis - called the data on July inflation "the first hint" of the beginning of a decline in this indicator, but later added that this does not eliminate the need to increase the base interest rate further. Kashkari recalled that the inflation target for the US central bank is 2%.

Spectacular growth of the FTSE 100 on Friday, experts explain the morning release of statistics on gross domestic product (GDP) of the UK.

According to preliminary data from the National Statistical Office of the country, in the second quarter of 2022, the UK GDP grew by 2.9% in annual terms, and fell by 0.1% in quarterly terms. At the same time, analysts predicted an increase of 2.8% and a fall of 0.3%, respectively. By the way, this decrease was the first in more than a year.

Also, the National Statistical Service of Great Britain reported an increase in industrial production in the country in June by 2.4% in annual terms and a fall of 0.9% in monthly terms. At the same time, the market assumed an increase in the first indicator by 1.6% and a decrease in the second by 1.3%.

Recall that during the meeting last week, the Bank of England made a forecast according to which in the fourth quarter of 2022 the UK economy will face a protracted recession amid a permanent rise in inflation.

In the past month, the level of consumer prices in France soared to 6.8% in annual terms, which was a record increase for the entire time the indicator was calculated. July inflation accelerated by 0.3% compared to June.

Meanwhile, industrial output in the eurozone rose 0.7% in June after a sharp 2.1% increase in May. In annual terms, this indicator rose by 2.4% after rising by 1.6% a month earlier.

Trading Results the Day Before

European stock indicators showed mixed trends on Thursday after an active rise the day before.

As a result, the composite index of the leading European companies STOXX Europe 600 increased by 0.06% to 440.16 points.

The highest results among the components of the index were shown by the securities of the Swedish oil and gas exploration and production company Orron Energy AB, which soared by 15.5%. Shares of the Dutch insurance company Aegon N.V. also rose significantly. (+8.9%) and the Danish manufacturer of diagnostic equipment Ambu A/S (+8%).

The list of declines among the components of STOXX Europe 600 was headed by Danish IT company Netcompany Group A/S (-15.8%), British pharmaceutical GSK PLC (-10%) and energy Oersted A/S (-7.7%).

Meanwhile, the French CAC 40 rose 0.33%, the German DAX shed 0.05% and the UK FTSE 100 shed 0.55%.

The value of securities of the German energy concern RWE AG decreased by 0.6%, despite the fact that in January-June the company increased its adjusted net profit by 1.8 times, and also confirmed its annual forecast.

The market capitalization of German truck manufacturer Daimler Truck Holding AG sank 0.4% despite a 1.5-fold increase in net profit in April-June amid strong demand.

German container shipping operator Hapag-Lloyd AG plunged 6.6% despite a 1.8x increase in revenue in the first half of the year on the back of a sharp increase in freight rates.

German power equipment supplier Siemens Energy AG edged up 0.7% on better-than-expected third-quarter earnings.