European stock markets shook off recent weakness and marched higher on Friday, with Fiat Chrysler setting an upbeat tone for car makers just a day after being accused of cheating on emissions tests.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +0.32% advanced 1% to close at 365.94, easily erasing a 0.7% loss from Thursday. For the week, the pan-European benchmark scored a gain of 0.1%.
Fiat drives higher: Thursday’s session was weighed by car makers tumbling late in the day after the U.S. Environmental Protection Agency accused Fiat Chrysler Automobiles NV of using software to cheat on diesel emissions testing.
The Italian-American car maker’s stock ended Thursday 16% lower in Europe and down 10% in the U.S. On Friday, the shares rebounded with a 4.6% jump in European trade, though the U.S. listing was trading lower. Shares of Exor NV /zigman2/quotes/205060095/delayed IT:EXO +0.57% , a major Fiat shareholder, climbed 6.7%.
Analysts at Citigroup said the market “will immediately draw parallels” to Volkswagen AG /zigman2/quotes/204309985/delayed DE:VOW3 -1.97% . But they added that it is “worth noting that at this stage the [EPA] has not declared the software a defeat device and unlike VW, FCA is denying the allegation.” VW earlier this week pleaded guilty in U.S. emissions scam probe and agreed to pay $4.3 billion in penalties.
Mercedes and Lexus: Two luxury debuts in Detroit
Mercedes showcased what it calls "the first car without lines" with the new E400 Coupe, while Lexus introduced the LS500 with an exotic daylight opening.
Fiat Chief Executive Officer Sergio Marchionne called the allegation “unadulterated hogwash,” according to media reports .
“Notwithstanding the differences, if we were to suggest the cost in terms of fines/compensation/buy-backs were potentially on the same level as VW, then we estimate the potential cost to FCA could be in excess of €3.3 billion,” the Citi analysts said.
Other car makers rose on Friday, with shares of Ferrari NV /zigman2/quotes/200586103/delayed IT:RACE -0.70% up 2.7% and Volkswagen up 1.5%.
Drugmakers on the mend: Pharmaceutical companies also rebounded on Friday, having fallen after U.S. President-elect Donald Trump’s press conference on Wednesday. Trump hinted at forthcoming legislation that could erode the sector’s profitability.
Shares of Novo Nordisk AS /zigman2/quotes/207193277/delayed DK:NOVO.B -0.49% /zigman2/quotes/203484366/composite NVO -0.10% gained 2.1%, while Hikma Pharmaceuticals PLC /zigman2/quotes/204872832/delayed UK:HIK +0.29% and Sanofi SA /zigman2/quotes/206928357/delayed FR:SAN +2.18% /zigman2/quotes/201967021/composite SNY +2.06% both gained 2%.
Germany’s DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX +0.05% added 0.9% to end at 11,629.18, while France’s CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 +0.54% jumped 1.2% to 4,922.49.