European shares closed with varied results on Friday, as investors tread carefully due to escalating Middle East tensions and uncertainty regarding the Federal Reserve's future interest rates. Following Israel's retaliatory strikes against Iran, tensions have heightened in the Middle East, further fueling investor caution.
Remarks from Federal Reserve officials hinting towards a more aggressive approach have led investors to lower their hopes for the Federal Reserve cutting interest rates within the year. The general consensus amongst market players now seems to be that the US Central bank is likely to lower its prime interest rate in September.
The Pan-European Stoxx 600 concluded the day with a 0.08% decrease. The UK's FTSE 100 increased by 0.24%, while Germany's DAX and France's CAC 40 fell by 0.56% and 0.01% respectively. The Switzerland's SMI, however, had a positive day, climbing 0.59%.
In other European markets, Denmark, Finland, Greece, Iceland, Poland, Russia and Turkey concluded on a high note. In contrast, Netherlands, Norway, Portugal, Spain and Sweden had a weak day, while Austria, Belgium and the Czech Republic closed flat.
Within the UK market, British packaging company Mondi experienced a significant 9.3% increase, following its decision not to bid for DS Smith, which had previously agreed to a £5.8-billion deal with International Paper. DS Smith's shares unfortunately plummeted by more than 10%.
Other UK companies such as Rentokil Initial and Coca-Cola HBC saw increases of about 2.4% and nearly 2% respectively, while JD Sports Fashion fell by 2.8% and B&M European Value Retail, Marks & Spencer, among others, dropped between 1 to 2%.
In the German market, a handful of companies posted moderate gains, including the likes of Symrise and Vonovia. Others such as Sartorius and Infineon, experienced losses between 1 to 2.5%.
In Paris, L'Oreal enjoyed a 5% increase after reporting higher-than-expected Q1 sales. However, not all French companies experienced the same success, with WorldLine and Edenred plummeting about 7%, and others, like Renault and Saint Gobain, experiencing losses between 1 to 3.2%.
On the topic of economic news, Germany's producer prices continued their decline in March, albeit at the slowest rate in nine months, according to data from Destatis. In the UK, retail sales in March remained static on a month-on-month basis, contradicting expected growth predictions, as per preliminary data from the Office for National Statistics.
