European stocks closed higher on Friday, with several major markets reaching record highs. Investor optimism was bolstered by China's stimulus announcements and expectations of further interest rate cuts by central banks. Soft inflation data from France and Spain also helped strengthen market sentiment.
The pan-European Stoxx 600 advanced 0.47%, the U.K.'s FTSE 100 increased by 0.43%, Germany's DAX rose 1.22%, and France's CAC 40 climbed 0.64%. Switzerland's SMI was up by 0.2%.
Other European markets that saw gains included Austria, Belgium, Finland, Iceland, the Netherlands, Norway, Poland, Portugal, Russia, and Spain. Conversely, Denmark, Greece, Sweden, and Turkey closed lower.
In the U.K. market, Croda International, Smith & Nephew, Frasers Group, Entain, Halma, Sainsbury, Spirax Group, and IAG increased by 2% to 3.3%. Prudential gained 2.7% amid reports that it is close to finalizing a 15-year partnership with Indonesia's largest Islamic lender, PT Bank Syariah Indonesia, in a deal worth several hundred million dollars. Additionally, Prudential has reportedly agreed to acquire full ownership of Prudential Zenith Life Insurance, its joint venture in Nigeria.
However, Next, Endeavour Mining, Fresnillo, Beazley, SSE, and Howden Joinery ended notably lower.
In Germany, stocks such as Brenntag, Infineon, and BASF saw gains of 6.5% to 7%. Siemens Healthineers rose by 5.1%, while Porsche, Bayer, Continental, BMW, Mercedes-Benz, Adidas, Puma, Zalando, Daimler Truck Holding, Qiagen, Volkswagen, and Sartorius increased by 2% to 4.5%. HeidelbergCement, Siemens Energy, and MTU Aero Engines lost 1.2% to 1.7%.
In France, Kering surged over 6%, STMicroelectronics gained around 6%, and Stellantis, LVMH, Renault, and Edenred advanced between 3.5% and 4.1%. Companies such as Essilor, Teleperformance, Capgemini, Eurofins Scientific, Pernod Ricard, Accor, Carrefour, Vivendi, and Air Liquide ended higher by 1% to 2.3%. On the downside, Schneider Electric, Safran, Saint-Gobain, and Publicis Groupe lost 1% to 1.7%.
On the economic front, France's consumer price inflation eased in September to its lowest level in more than three years, driven by a decline in energy prices, according to a provisional estimate from INSEE. A separate report indicated that producer prices increased for the second consecutive month in August.
France's consumer price index rose by 1.2% year-over-year in September, down from the 1.8% increase in the previous month. Economists had predicted a reduction to 1.6%. On a monthly basis, consumer prices fell by 1.2% in September, reversing the 0.5% rise in August. Harmonized EU inflation also softened to 1.5% from 2.2% in the prior month, showing a monthly decrease of 1.2%.
Another report from the statistical office showed that industrial producer prices in the domestic market rose by 0.2% month-on-month in August, slightly below the 0.3% increase seen in July. Annually, the decline in producer prices deepened to 6.3% from 5.7% in July.
Data released earlier in the day indicated that Germany's unemployment rate held steady at 6%, as expected. However, the number of unemployed individuals increased by 17,000 in September 2024, exceeding the anticipated rise of 12,000.
In the U.S., the Commerce Department reported that its Personal Consumption Expenditures (PCE) price index edged up by 0.1% in August, following a 0.2% increase in July, aligning with expectations. The annual growth rate of the PCE price index slowed to 2.2% in August from 2.5% in July, meeting economists' forecast of 2.3%. Additionally, the annual growth rate of the core PCE price index accelerated to 2.7% in August from 2.6% in July, consistent with estimates.
