European stocks rose modestly on Friday, after purchasing managers’ surveys across the region largely missed expectations, though trade-related comments from Chinese President Xi Jinping offered some support for global equities.
Paring back stronger, earlier gains, the Stoxx Europe 600 SXXP, +0.38% rose 0.4% to 403.70, after falling 0.4% on Thursday, marking the fourth-straight loss. The index was headed for its first weekly loss in seven, down 0.5%.
U.S. stock futures were modestly higher after Thursday’s session ended, with losses for all three major indexes amid mixed headlines on U.S.-China trade-talks progress. Chinese President Xi Jinping said on Friday that while Beijing wants a trade deal with the U.S., it can “fight back” if it wants.
A flash reading of the eurozone manufacturing purchasing managers index (PMI) rose to a three-month high of 46.6 in November, but remained below 50, indicating purchasing managers reported contractionary conditions. Services PMIs were also weak.
Along with the French and German manufacturing PMIs, the data “almost universally missed expectations,” Jasper Lawler, head of research at London Capital Group, told clients.
“The numbers deepen concerns over growth in the region. The longer the PMIs languish at these levels the lesser the prospects for a 2020 rebound,” said Lawler, who added that there was definitely a “mismatch” between what investors expect and what the purchasing managers are saying.
“That for us is a gaping hole in the middle of the huge gains in European stock indexes this year,” he said. Enthusiasm for stocks in the region has built up toward the latter half of the year, with the Stoxx 600 set for a near 20% gain with just over a month left in the year.
Elsewhere, third-quarter German gross domestic product rose 0.1%, in line with preliminary data.
Meanwhile, in her first policy speech as European Central Bank President, Christine Lagarde called for a “new European policy mix” to drive the region’s economy forward. She said the central bank will undertake a “strategic review” in the near future, and that monetary policy could achieve its goal faster with fewer side effects if other policies were supporting it.
Banks did the heavy lifting on Friday, with HSBC Holdings HSBC, -0.70% HSBA, +1.76% up 2% and BNP Paribas BNP, +0.04% gaining 1.3%. Major oil companies were also boosting the main European bourses, with Total TOT, +0.89% FP, +0.80% and BP BP, +0.21% BP, +0.55% each up over 1%.