By Barbara Kollmeyer
European stocks fell Friday, as investors grew cautious ahead of the weekend with an election looming in Germany on Sunday, while also waiting for news on indebted real estate giant China Evergrande.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +0.34% fell nearly 1% to 462.91, after three straight sessions with gains of around 1% each. For the week, the index is poised to rise 0.5%. The German DAX /zigman2/quotes/210597999/delayed DX:DAX -0.21% fell 0.7%, the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.94% dropped 1% and the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.04% slipped 0.4%.
Stocks also slipped in the U.S. as investors absorbed news from several central bank meetings this week, with the Federal Reserve and Bank of England taking a hawkish tone in the views of some analysts. The yield on the 10-year U.S. Treasury bond /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +0.97% continued climbing above 1.4% on Friday a day after seeing the biggest jump in months. German bund yields /zigman2/quotes/211347112/realtime BX:TMBMKDE-10Y 0.00% rose 3 basis points to negative 0.22%.
Investors continued to watch for updates from troubled real-estate company China Evergrande /zigman2/quotes/222823968/delayed HK:6666 +2.68% , with no clear news as to whether the company made a $83.5 million interest payment on dollar bonds that was due Thursday. Bondholders reportedly don’t have their money yet. The company has 30 days before it could trigger a default.
Economic data from Germany’s IFO Institute revealed a third-straight monthly fall for the business climate index. “Problems in the procurement of raw materials and intermediate products are putting the brakes on the German economy. Manufacturing is experiencing a bottleneck recession,” said Clemens Fuest,president of the ifo Institute, in a press release.
That comes as the country faces an election this weekend that will decide who will replace Chancellor Angela Merkel.
“Finance minister Olaf Scholz (SPD) remains in pole position to succeed Angela Merkel as German chancellor after the election this Sunday, although Armin Laschet from Merkel’s centre-right CDU/CSU has now narrowed the gap to almost within the margin of error. Surprises are possible,” said Holger Schmieding, chief economist at Berenberg, in a note to clients.
The French CAC saw the biggest losses as heavilyweighted luxury goods group LVMH Moët Hennessy Louis Vuitton /zigman2/quotes/206499835/delayed IT:LVMH +2.25% fell 2% and German sportswear maker Adidas fell 2.8% on the heels of losses for U.S. rival Nike /zigman2/quotes/203439053/composite NKE -1.12% whose shares tumbled after disappointing results late Thursday.
Daimler -owned Mercedes-Benz will become a new partner of a European battery venture — Automotive Cells Company — with Stellantis /zigman2/quotes/204248628/composite STLA -1.63% and TotalEnergies /zigman2/quotes/206172043/delayed FR:TTE +2.12% , the companies said in a statement. Shares of Daimler climbed 1.6%. Stellantis shares rose 0.4% and TotalEnergies fell 0.6%.
Rolls-Royce Holding /zigman2/quotes/203646520/delayed UK:RR +0.31% was a top gainer, with shares up 5%. Analysts at Berenberg published a positive note on the company Thursday.
“We think that the decision by the U.S. this week to open its borders to vaccinated individuals is a positive step toward a more robust recovery in long-haul travel, which has lagged domestic travel markets. For Rolls-Royce, it will help to perpetuate positive trends in engine flying hours into H1 2022 and beyond, in our view,” said analysts Andrew Gollan and Ross Law.