Market Analysis

European shares experienced a decline on Friday, driven by drops in technology and industrials stocks. Investors awaited euro zone inflation data to gain insights into potential interest rate cuts by the European Central Bank beyond June.

The STOXX 600, a broad measure of European stocks, fell 0.5% by 0830 GMT, influenced also by higher euro zone bond yields. Despite this, the index was poised for its second consecutive weekly gain, buoyed by a strong earnings season that bolstered investor sentiment until Wednesday.

Thomas McGarrity, head of equities at RBC Wealth Management, commented on the market's performance, noting, “We’ve had a very good run, so it’s natural to have a slight pause.”

Attention was focused on the final euro zone inflation figures later in the day. European Central Bank board member Isabel Schnabel had recently advised caution regarding additional rate cuts following an anticipated cut in June. McGarrity observed, “June is widely expected for the first rate cut, but it’s natural for the ECB to try and urge a little bit of caution and sort of reiterate that it’s data dependent.”

The outlook for major central banks' policies has become complex. While several ECB policymakers have signaled a June cut, they have also expressed reservations about future cuts. In contrast, recent positive economic data from the U.S. has not prompted Federal Reserve policymakers to openly adjust their views on the timing of rate cuts.

The construction and materials sector saw the sharpest decline, down 1.3%, with Nibe falling 7.5% after a downgrade by Citigroup. Technology stocks also slipped 1.3%, led by Auto Trader Group’s 4.9% drop following a downgrade from Morgan Stanley.

Siemens declined 2.2% on Friday, compounding a 7% loss from Thursday after its second-quarter earnings report, weighing down the industrial sector, which fell 1.1%. Additionally, news emerged that ABB would acquire Siemens' wiring accessories business in China.

Meanwhile, Swiss luxury company Richemont surged 4.5% after reporting robust fourth-quarter results and appointing Nicolas Bos as group CEO. The broader luxury sector rose 0.4%.

Lagercrantz Group AB led the STOXX 600 with a 9.1% gain after reporting strong fourth-quarter earnings.

H&M climbed 2.3% following an upgrade from RBC to “outperform” from “sector perform”.

French re-insurer Scor dropped 9.6% due to first-quarter results falling short of expectations.

German utility E.ON fell 4.4% as it traded ex-dividend.

Paraphrasing text from "Reuters" all rights reserved by the original author.