By Barbara Kollmeyer
European stocks headed to a fresh record on on Friday, getting a boost from upbeat economic data and optimism across Wall Street.
Friday’s session saw the Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -1.14% climb 0.7% to 449.55, reaching a fresh intraday record of 449.55, taking out Thursday’s closing high of 446.44. For the month so far, the index is up 2.8%. The German DAX /zigman2/quotes/210597999/delayed DX:DAX -1.26% rose 0.8%, the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -1.20% gained 0.7%, and the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -1.07% added 0.4%. London markets will be closed on Monday for a holiday.
U.S. stocks /zigman2/quotes/210598065/realtime DJIA -3.57% /zigman2/quotes/210599714/realtime SPX -4.04% /zigman2/quotes/210598365/realtime COMP -4.73% climbed in early trade, with investors taking in stride data showing the personal-consumption expenditures price index approached its highest level in nearly 13 years at 3.6% .
Investors have been concerned that persistent price pressures could prompt the Federal Reserve to pull back on its accommodative policy, despite reassurances from the central bank that it is in no hurry to do that.
As inflationary pressures “bubble under the surface,” investors have been trying to prepare for all eventualities, flipping into value stocks that are geared at economic recoveries and out of growth stocks, said Richard Hunter, head of markets at Interactive Investor, in a note to clients.
“The renewed consideration of cyclical stocks as an investment destination has generally played into the hands of the FTSE 100, which has now risen by 9% in the year to date. The index is replete with sectors falling into the recovery category, such as the banks, oils and miners,” said Hunter.
Also in focus, President Joe Biden is expected on Friday to propose a $6 trillion budget for the coming fiscal year that would boost spending on infrastructure, education, healthcare and social services.
U.S. markets will be closed on Monday for the Memorial Day holiday, which also marks the start of traditional summer vacations.
European stocks were lifted by data showing eurozone business and household confidence increased again sharply in May, rising above its pre-COVID-19 pandemic level for the second consecutive month.
“Importantly, the rise in consumer confidence was driven by a marked fall in unemployment expectations, showing households are confident the recovery in the labour market will also be swift,” said economist at Oxford Economics.
“This bolsters our view that households are raring to spend the savings they accumulated during the lockdowns, and that a consumption boom is likely to materialize from June and onto the summer.”
Less cheerful was data showing French GDP revised down to a 0.1% drop on the quarter from an initial estimate of a 0.4% gain. French household consumption of goods slumped 8.3% on the month in April amid a COVID-19 lockdown.
Among European stocks on the move, shares of banking giant HSBC /zigman2/quotes/208272822/composite HSBC -2.67% /zigman2/quotes/203901799/delayed UK:HSBA -1.37% climbed 2%, with industrial conglomerate Siemens /zigman2/quotes/205905025/delayed XE:SIE -2.47% jumped 3.6%. Shares of airline manufacturer Airbus /zigman2/quotes/208224336/delayed FR:AIR -0.31% rose 2.6%. Insurer Allianz /zigman2/quotes/210095234/delayed XE:ALV -0.69% rose 1% and consumer goods giant Unilever /zigman2/quotes/204685760/composite UL -3.62% /zigman2/quotes/205449809/delayed UK:ULVR -1.10% rose 1.3%.