Bloomberg
European stocks edged higher on Friday, setting the benchmark index on track for a third straight week of gains, as investors watched for developments in the Syria situation and in the trade spat between the U.S. and China.
Sage Group PLC shares tanked after a sales warning, while Volkswagen AG shares dropped after the German auto maker’s board replaced its chief executive.
What are markets doing?
The Stoxx Europe 600 index rose 0.2% to 379.50, adding to a 0.7% advance from Thursday. The pan-European benchmark is now on track for a 1.2% weekly gain, which would leave the gauge at its highest level since late February.
Germany’s DAX 30 index moved up 0.4% to 12,469.13, while France’s CAC 40 gained 0.2% to 5,318.98. The U.K.’s FTSE 100 index slipped 0.1% to 7,254.68.
The euro rose slightly to $1.2337 from $1.2327 late Thursday in New York, while the pound rallied to $1.4281 from $1.4227.
What is driving the market?
Geopolitical tensions continued to be in focus, with all eyes on whether the U.S. will launch a military strike on Syria in response to a suspected chemical-weapons attack that killed civilians.
Traders were cautiously optimistic after U.S. Defense Secretary Jim Mattis struck a note of caution over the potential for a strike, hinting the U.S. and its allies would need to take care not to spark a broader conflict with the country’s two biggest backers, Iran and Russia. His comments came after U.S. President Donald Trump also toned down his rhetoric, suggesting in a tweet Thursday that a strike might not be as imminent as thought.
Moreover, Trump suggested the U.S. could rejoin the Trans-Pacific Partnership trade pact, which also helped ease the market jitters, analysts said. In recent weeks, the U.S. has become embroiled in a trade tug-of-war with China, and is reportedly planning to ratchet up the pressure on Beijing to make concessions. The White House is expected to detail next week which Chinese imports are on the $100 billion hit list of products facing additional tariffs.
What are strategists saying?
“Although trade tensions continue to simmer on the back burner, traders have turned attention towards the potential conflict in Syria as a drive for the latest market knee-jerk reactions,” said Richard Perry, market analyst at Hantec Markets.
“Risk-on or risk-off now seems to stem from Donald Trump and the potential for a U.S. military response. Although Trump dialed back a touch yesterday, the pawns are being positioned, and a response of some degree is still to be expected. It seems to be a matter now of when,” he added in a note.
What is new in economics?
The eurozone’s trade surplus with the rest of the world widened in February, with imports falling 3.1%. Exports also declined, but only by 2.3%, leaving the currency union with a €21.0 billion ($25.9 billion) surplus, up from €20.2 billion in January.
Which stocks are in focus?
Sage shares dropped 12%. The accountancy software company cut its full-year forecast for revenue growth after a disappointing first half to fiscal 2018.
Shares of Rolls-Royce fell 1.8%. The aircraft engine maker said it needs to carry out additional inspections on some versions of its Trent 1000 engines, leading to higher costs than expected in 2018.
Shares of Hammerson PLC slid 11%. The move came after Klepierre SA said it no longer intends to make a takeover offer for the U.K. mall owner after its £5.04 billion ($7.17 billion) proposal was rejected. Klepierre shares rose 3.2%.
London Stock Exchange Group PLC shares rose 0.4% after appointing Goldman Sachs veteran David Schwimmer as its new CEO.
Volkswagen AG shares lost 1.2% after car maker’s board ousted Chief Executive Matthias Müller . The company replaced him with Herbert Diess as part of a broader restructuring of its automotive businesses.
Alstom SA added 1.1% after consortium led by the French train maker signed a contract valued at €1.8 billion ($2.22 billion) to provide a 67-kilometer driverless metro system in Montreal.