German and U.K. stocks led advances in European equity trade Friday, finding aid in losses for the euro and the pound against the dollar.
As the week was winding down, new round of European corporate earnings results arrived, and shares of Swedish appliance maker Electrolux AB were punished after the release of its results.
How markets are moving
Germany’s DAX 30 index rose 0.7% to 12,586.37, while the U.K.’s FTSE 100 added 0.5% to 7,455.34.
France’s CAC 40 index tacked on 0.1% to reach 5,453.58, and Spain’s IBEX 35 was 0.1% higher at 9,907.50.
The Stoxx Europe 600 index gained 0.1% to 384.21, led by the tech and basic materials sectors. The oil and gas and telecom groups lost ground.
For the week, the pan-European benchmark was course to rise 0.6%, which would mark a fifth straight winning week.
The euro dropped to $1.2072, from $1.2104 late Thursday in New York. The euro fell below $1.22 on Thursday after the European Central Bank held benchmark interest rates steady as expected.
The pound fell to $1.3815 after the GDP release, down from $1.3880 before the release and compared with $1.3915 late Thursday in New York. Sterling hit an intraday low of $1.3803, according to FactSet.
What’s driving markets
German and U.K. equities marched higher as the euro and the pound fell. Their stock benchmarks are heavily weighted with exporters and multinational companies, and currency weakness can bolster earnings and revenue for those companies.
The pound on Friday dropped to its lowest since early March after a preliminary reading of U.K. first-quarter economic growth significantly undershot expectations.
The euro extended losses from Thursday, with analysts saying remarks by ECB chief Mario Draghi suggested the central bank is concerned about slowing in the eurozone economy, even as he stressed a solid, broad-based expansion in the region.
French first-quarter GDP figures released Friday highlighted investor concerns about the health of the eurozone as growth in Europe’s second-largest economy slowed.
Draghi also offered little in the way of hints about if the ECB will indeed end its bond-buying program in September and when it expects to begin to raise interest rates.
Meanwhile, investors worldwide were also watching a thaw in tensions between North and South Korea. North Korea’s leader Kim Jong Un crossed the military demarcation line to meet South Korea’s President Moon Jae-in, reportedly discussed denuclearizing the Korean Peninsula during a historic meeting on Friday.
Stocks in focus
Electrolux AB shares sank 13% as the household appliance producer’s first-quarter net profit fell 46%, missing forecasts. The company booked hefty restructuring charges in its North American appliances business and felt pressure from raw-material costs and currency headwinds.
RBS fell 1.1%, even as the U.K.- majority owned lender posted a threefold rise in first-quarter net profit to £792 million.
“RBS shares are in the red after investors continue to fret about the looming fine from the U.S. Department of Justice,” said David Madden, market analyst at CMC Markets, in a note.”RBS won’t be able to restart paying a dividend until after the DOJ fine has been paid, and until then the stock is likely to be held back.”
Banco Bilbao Vizcaya Argentaria SA , or BBVA, rose 2.1% after the Spanish lender posted a roughly 12% rise in first-quarter net profit to €1.34 billion euros ($1.63 billion).
Economic data
British gross domestic product marked its slowest rate of growth since 2012, with a reading of 0.1%, compared with expectations of 0.3% and with a rate of 0.4% in the fourth quarter of 2017.
French growth slowed in the first quarter, to a rate of 0.3%, raising questions over the long-term strength of the eurozone’s recovery.
Also from France, inflation steadied at a rate of 1.6% in April, said statistics agency Insee, as strong price rises in energy and food offset a slowdown in services prices and a decline in manufactured goods prices.