European stocks close higher Friday but most post weekly declines; FTSE 100 bucks the trend
Key Takeaways
- •European equities rallied on Friday, but only the UK's FTSE 100 finished the week in positive territory, as Italy's FTSE MIB and France's CAC suffered the steepest weekly losses.
- •Student protests in France drew 71,500 participants on Thursday, and unions vowed to press on despite the government committing roughly 3,000 extra teachers, with 141 schools still closed and another nationwide strike planned for Tuesday.
- •UK 10-year yields posted the largest weekly increase among major European markets, while the gap between French and German benchmark yields stood at roughly 138 basis points.
- •The dollar strengthened against European currencies over the week, with the euro's 0.51% decline representing the largest move among the three major pairs.
- •US Treasury yields rose, led by a 4.57-basis-point jump in the 2-year, yet gold, silver, and bitcoin all advanced and crude oil held support near its 100-hour moving average.
Major European stock indices finished higher on Friday, but the day's gains were not enough to erase the weekly declines for most markets. Italy's FTSE MIB and France'sAC led the weekly losses, while the UK's FTSE 100 was the outlier, ending the week in positive territory.
Friday Closing Levels
- Germany's DAX: 25,087.28, up 280.30 points, or 1.13%
- France's CAC: 7,803.34, up 73.64 points, or 0.95%
- UK's FTSE 100: 10,552.04, up 110.45 points, or 1.06%
- Spain's IBEX: 19,033.10, up 104.20 points, or 0.55%
- Italy's FTSE MIB: 49,746.30, up 448.41 points, or 0.91%
Weekly Performance
- Germany's DAX: −0.57%
- France's CAC: −1.19%
- UK's FTSE 100: +0.86%
- Spain's IBEX: −0.27%
- Italy's FTSE MIB: −1.46%
France's Unrest Remains in Focus
France contended with another week of student protests over teacher shortages, overcrowded classrooms and deteriorating school facilities. Thursday's demonstrations drew 71,500 participants nationwide, according to the Interior Ministry. The main Paris march was largely peaceful, but unrest elsewhere included arson, vandalism and attacks on teachers.
The protests underscore the tension between demands for better public services and pressure on the government to reduce its debt and deficit. On Friday, student unions vowed to continue despite the government's pledge to send roughly 3,000 additional teachers into classrooms. Some 141 schools remained shut, and another nationwide school strike is planned for Tuesday. For markets, the question is how the government meets those demands while keeping spending under control.
European Benchmark Yields End the Week Mixed
European 10-year yields were mixed on Friday, with German, French and UK yields moving higher while Spanish and Italian yields declined:
- Germany: 3.482%, up 2.4 basis points
- France: 4.859%, up 3.9 basis points
- UK: 5.447%, up 2.0 basis points
- Spain: 4.103%, down 3.0 basis points
- Italy: 4.574%, down 1.6 basis points
For the week, the UK saw the largest rise in benchmark 10-year yields:
- Germany: +2.0 basis points
- France: −0.4 basis points
- UK: +6.7 basis points
- Spain: unchanged
- Italy: −3.5 basis points
Despite the unrest, France's benchmark yield ended the week marginally lower, though it remains above those of Germany, Spain and Italy. At Friday's closing levels, the gap between French and German 10-year yields stood at roughly 138 basis points — a spread widely watched as a gauge of how bond markets differentiate among euro-area sovereign issuers.
Dollar Advances Against European Currencies for the Week
Weekly changes in the European currency pairs favored the dollar:
- EURUSD: down 57 pips, or 0.51%
- GBPUSD: down 9 pips, or 0.07%
- USDCHF: up 18 pips, or 0.22%
The euro posted the largest decline of the three, while sterling was little changed.
At the European close on Friday, the dollar was mixed. It was higher against the Canadian dollar, yen, euro, pound and New Zealand dollar, but lower against the Australian dollar and Swiss franc. The largest moves came against the CAD, with USDCAD up 0.34%, and the AUD, with AUDUSD up 0.30%.
US Yields Rise, but Metals and Bitcoin Advance
US Treasury yields moved higher as European traders headed for the exits, with the largest increases at the shorter end of the curve:
- 2-year: 4.8017%, up 4.57 basis points
- 5-year: 5.0283%, up 3.73 basis points
- 10-year: 5.2547%, up 2.17 basis points
- 30-year: 5.6116%, up 0.46 basis point
Markets continue to price in a 19.4% chance of a rate hike in October, which leaves the greater share of implied probability on rates staying unchanged at that meeting.
Gold and silver moved higher despite the rise in US yields. Bitcoin recovered, while crude oil was little changed:
- WTI crude oil: $91.59, up $0.10, or 0.11%
- Spot gold: $4,188.69, up $55.00, or 1.33%
- Silver: $60.78, up $1.60, or 2.71%
- Copper: $6.6965, up 1.95%
- Bitcoin: $82,665, up $928, or 1.14%
Crude oil held support at its 100-hour moving average during Friday's dip. That average stood at $90.08 at the session lows, and the low reached $90.01 before prices bounced.
Friday gave European stock buyers a better finish, but most of the major indices still moved lower over the week. The UK was the exception, while Italy and France had the most ground to recover.
Source: ForexLive / InvestingLive
