Europe close: Stocks finish higher on China optimism
By Josh White
Date: Friday 20 Jan 2023
(Sharecast News) - European shares were still in the green by the end of Friday, amid investor optimism over the reopening of China's economy, and as Wall Street equities started to recover from a weak session overnight.
The pan-European Stoxx 600 was up 0.35% at 452.03, as the DAX in Frankfurt was 0.76% firmer at 15,033.56.
France's CAC 40 added 0.63% to 6,995.99, and the FTSE 100 in London managed gains of 0.3% to 7,770.59.
"After yesterday's little setback European markets have seen a modest rebound today, as we come to the end of what looks set to be a negative week for stock markets," said CMC Markets chief market analyst Michael Hewson.
"Having seen such a strong start to the year there was always the probability that we'd see a little bit of profit taking, however that doesn't mean that the early year optimism that has been the hallmark of this early year rebound is evaporating, and that we might start to see a sharp move lower.
"One bad day does not make a trend despite increasing evidence that the global economy is slowing down."
Retail sales in the UK continued to fall in December, official data showed, as hard-pressed shoppers cut back on spending.
According to the Office for National Statistics, retail sales volumes were estimated to have fallen 1% last month, compounding a 0.5% slide in November, revised downwards from an initial estimate of -0.4%.
Analysts had been expecting a 0.5% improvement in sales in December.
Year-on-year, sales fell 5.8%; they were also 1.7% below February 2020, before the pandemic.
However, British blue chip shares with exposure to China made gains on the back of a rally in Beijing with Prudential up 1.48%, Glencore rising 2.09% and Rio Tinto 1.01% firmer.
Elsewhere, Japan's consumer inflation hit a fresh 41 year high, keeping the heat on policymakers to end the country's ultra-easy monetary policy.
Core consumer prices rose by an annual 4% in December, the fastest inflation rate since 1981.
The Bank of Japan defied market expectations earlier this week and stood by its yield curve control policy.
In Germany, the annual producer inflation rate fell to 21.6% in December, a 13-month low as price pressures showed signs of easing.
Eyes were also on European Central Bank president Christine Lagarde, who was speaking again at the Davos talkfest after stressing on Thursday that the central bank would stay the course of rate hikes to tame inflation.
In other equity news, Sweden's Avanza Bank soared 7.48% after it reported a large rise in fourth quarter earnings.
UK power generator SSE gained 2.85% after it upped earnings guidance on the back of surging energy prices.
On the downside, British wealth manager Close Brothers tanked 10.54% after it warned of continued weak performance from its Winterflood unit and an expectation of further sizeable provisions against the Novitas loan book, "both of which are likely to drive material current year earnings forecast downgrades".
Reporting by Josh White for Sharecast.com. Additional reporting by Frank Prenesti.
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