European markets nudge higher as investors assess monetary policy, data; Adidas up 6%

Elliot Smith

European markets climbed on Friday as investors continued to assess the trajectory of monetary policy and await a fresh round of economic data.

European markets

TICKER	COMPANY	PRICE	CHANGE	%CHANGE
.FTSE	FTSE 100	7745.2	42.56	0.55
.GDAXI	DAX	15806.71	72.47	0.46
.FCHI	CAC 40 Index	7377.53	36.76	0.5
.FTMIB	FTSE MIB	26907.82	237.53	0.89
.IBEX	IBEX 35 Idx	9097.4	53.8	0.59

The pan-European Stoxx 600 added 0.4% in early trade, with oil and gas stocks climbing 2% to lead gains as almost all sectors and major bourses entered positive territory. Food and beverage stocks slipped 0.3%.

The European blue chip index closed Thursday’s session down 0.45%, having trimmed earlier losses, as investors digested a fresh 25 basis point interest rate hike from the European Central Bank.

That followed data earlier this week showing euro zone headline inflation rose slightly in April to 7% year on year, though core inflation, a key worry for policymakers, fell slightly to 5.6% from its previous record high. Economic growth in the bloc was stagnant in the first quarter.

Across the pond, the U.S. Federal Reserve on Wednesday also issued a 25 basis point increase to interest rates, as widely expected, though it hinted at a possible pause in its monetary tightening cycle in a post-meeting statement.

Friday will see a slew of economic data releases, including April construction PMIs and March retail sales figures from around major euro zone economies.

Earnings season continues to rumble on, with German sportswear giant Adidas among the big names reporting before the bell, while HSBC will hold its annual general meeting.

Stateside, U.S. stock futures ticked higher early on Friday morning as investors processed a fresh round of earnings after the closing bell on Thursday, with tech giant Apple beating expectations on both the top and bottom lines for the fiscal second quarter.

Wall Street has suffered a four-day losing streak as further fears were ignited about the U.S. banking sector.

Markets in Asia-Pacific were mixed overnight, with Hong Kong’s Hang Seng index leading gains in the region while mainland Chinese markets slipped after a weak Caixin services PMI reading for April.

Adidas up 6% after resilient earnings, despite Yeezy issues

Adidas shares jumped 6% in early European trade after the German sportswear giant beat first-quarter earnings expectations, despite a 400 million euro ($441.56 million) hit to sales from the termination of its Yeezy partnership.

“There were a number of encouraging signs in Adidas’ Q1 print. The firm reported better than expected China performance, a sequential improvement in inventory reduction and a scaling up of its franchise, such as Gazelle, Samba and Campus, along with accelerating momentum within the performance business,” said Mamta Valeccha, equity research analyst at Quilter Cheviot.

“Despite this, forward guidance is for negative high single digit growth, which may be disappointing to some. However, this is a marathon not a sprint for Adidas. The company has a number of issues to get through such as rebuilding relationships with suppliers, a growth plan for China and the need to get to a more normalised level of inventory which will put pressure on margins, especially in North America.”

At the bottom of the Stoxx 600, Evotec shares fell 7% after the announcement that the biotech will leave Germany’s MDAX index.

– Elliot Smith

Here are the opening calls

Britain’s FTSE 100 is set to climb by around 30 points to 7,733, Germany’s DAX is seen around 45 points higher at 15,779 and France’s CAC 40 is expected to add around 21 points to 7,362.

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The Wall Street bank said it had observed greater ownership of the energy sector due to a change in the way ESG investors — or those who take environmental, social and governance factors into account — approach investing. Instead of divesting from fossil fuels altogether, they’re focusing more on engaging with these companies for better environmental outcomes, according to the bank.

ESG funds raised their exposure to the energy sector by 8 percentage points in the first three months of this year, Goldman added.

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Source : cnbc