European stocks concluded the week on a positive note, with several key markets achieving multi-week highs. This uplift was driven by diminishing concerns over U.S. economic growth and growing optimism surrounding a potential interest rate cut by the Federal Reserve in the upcoming month.
In contrast, the U.K. market lagged behind, ending a five-day winning streak. The British pound appreciated against major currencies following data indicating a rebound in U.K. retail sales volume for July. This development dampened investor expectations for a rate cut from the Bank of England in the fourth quarter.
Overall, most markets registered substantial weekly gains.
The pan-European Stoxx 600 closed 0.31% higher. Germany's DAX advanced by 0.77%, and France's CAC 40 rose by 0.35%. Meanwhile, the U.K.'s FTSE 100 declined by 0.43%, and Switzerland's SMI increased by 0.32%.
Among other European markets, Greece, Iceland, Norway, Poland, Portugal, Spain, and Sweden closed in positive territory. Conversely, Denmark, Russia, and Turkey finished weaker, while Austria, Belgium, Finland, and the Netherlands remained flat.
In the U.K. market, Entain saw an increase of approximately 2.75%, and Burberry Group gained 2.26%. Other notable performers included Auto Trader Group, Rentokil Initial, Melrose Industries, Kingfisher, Endeavour Mining, Natwest Group, Beazley, Lloyds Banking Group, Pershing Square Holdings, Prudential, and DS Smith, which rose between 0.7% and 1.6%.
On the flip side, RightMove, Berkeley Group Holdings, Fresnillo, Ashtead Group, Vistry Group, Sage Group, Diageo, Persimmon, Segro, Whitbread, Haleon, Associated British Foods, Unite Group, Taylor Wimpey, Glencore, Barratt Developments, and Severn Trent experienced losses ranging from 1% to 2.6%.
In Germany, Bayer surged by over 10% after a U.S. appeals court ruled that federal law shields the company from a lawsuit alleging that its Roundup weed killer causes cancer. E.ON, Munich RE, Covestro, Deutsche Bank, Allianz, Hannover Rück, Zalando, BASF, Fresenius, Mercedes-Benz, Deutsche Boerse, and Deutsche Post saw gains between 1% and 2%.
However, Merck, Puma, Adidas, Continental, Infineon, and Brenntag ended lower.
In France, STMicroelectronics climbed by more than 3.5%. Other gainers included Accor, Eurofins Scientific, Publicis Groupe, BNP Paribas, and Safran, which rose between 1% and 1.7%. Pernod Ricard, Stellantis, Kering, and Legrand, however, closed lower.
On the economic front, the euro area witnessed a significant trade surplus surge in June, driven by increased surpluses in machinery, vehicles, chemicals, and other manufactured goods. According to Eurostat, the trade surplus rose to EUR 22.3 billion in June from EUR 14.0 billion in May, surpassing economists' expectations of EUR 13.3 billion.
In the U.K., retail sales volume bounced back in July, spurred by summer discounting and the European Football Championship, which boosted sales in department stores and sports equipment stores. Retail sales increased by 0.5% on a monthly basis in July, following a revised decline of 0.9% in June. Economists had projected a 0.6% increase.
Switzerland's industrial production experienced a sharp and unexpected rise in the second quarter, growing by 7.3% year-over-year, reversing a 2% decline in the first quarter. This marked the most significant increase since the first quarter of 2021, when production also rose by 7.3%.
