European stocks ended the trading session on a subdued note on Friday as sentiment turned cautious. Investors digested the latest economic data releases from the U.S. and Europe, assessed earnings reports, and eagerly awaited clarification on trade policies and tariff strategies from the Trump administration.
According to the Labor Department, U.S. non-farm payroll employment rose by 143,000 in January, which was below the economists' forecast of a 170,000 increase. The unemployment rate, however, slightly decreased to 4% from December's 4.1%.
The broader European index, the Stoxx 600, fell by 0.38%. The U.K.'s FTSE 100 slid 0.31%, while Germany's DAX and France's CAC 40 dropped by 0.53% and 0.43%, respectively. Switzerland's SMI declined by 0.24%. Despite Friday's setback, the FTSE 100, DAX, and CAC 40 managed to post modest gains over the week.
In Europe, markets in Austria, Denmark, Finland, Ireland, the Netherlands, Norway, Portugal, Russia, Spain, and Sweden also faced declines. In contrast, Greece, Iceland, Poland, and Turkiye saw gains, while Belgium remained unchanged.
In the U.K. market, several companies saw declines, with Barratt Redrow falling 4.4%. Other notable declines included Mondi, Vistry Group, Taylor Wimpey, ICP, GSK, Howden Joinery, Persimmon, Berkeley Group Holdings, Land Securities, Smith & Nephew, and Marks & Spencer, which dropped by 2% to 3.4%. AstraZeneca, Segro, Halma, B&M European Value Retail, M&G, Next, and Lloyds Banking Group also experienced significant declines.
Legal & General rose by about 1.2% following its agreement to sell its U.S. protection business to Meiji Yasuda Life Insurance Company for $2.3 billion. Other gainers included Pershing Square Holdings, Coca-Cola, Vodafone, Antofagasta, BP, BAE Systems, and Glencore, which climbed between 1% and 2%.
In Germany, Porsche saw a sharp decline of 7.3% after the carmaker warned that the costs of new models and battery-related expenses would impact its 2025 profits. Consequently, Porsche anticipates a profit margin of just 10%-12% this year, below analysts' expectations of 14.8% and the mid-term target of 17%-19%. Other notable decliners included Puma, Adidas, Qiagen, Volkswagen, BASF, BMW, Sartorius, Siemens Healthineers, Deutsche Post, RWE, Merck, Bayer, Mercedes-Benz, Vonovia, Infineon, and SAP, all falling 1% to 2.5%. Conversely, HeidelbergCement, Fresenius, Henkel, E.ON, and Rheinmetall saw gains ranging from 1.3% to 1.5%.
In France, losses were prominent among companies like Edenred, Pernod Ricard, Kering, and L'Oreal, which dropped between 4% and 5%. Capgemini, Hermes International, LVMH, Schneider Electric, and Stellantis saw declines between 1.2% and 2.2%. Meanwhile, Vivendi surged by nearly 4%, with Societe Generale and Vinci gaining approximately 2.5% and 2.3%, respectively. BNP Paribas, Credit Agricole, Orange, Renault, Thales, and Safran closed with gains ranging from 0.7% to 1.6%.
On the economic front, data from the UK indicated a surprising rise in house prices during January, setting a new record high, driven by increased buyer demand ahead of an anticipated stamp duty hike in April. Halifax reported a monthly house price growth of 0.7%, reversing a previous 0.2% decline and surpassing economists' predictions of a 0.4% rise. Annually, house price growth slowed to 3% from December's 3.4%, marking the slowest pace since last July, with the average property price reaching a record £299,138.
French economic data revealed a narrowing trade gap, shrinking to €3.9 billion in December 2024 from a revised €6.3 billion in November. This marks the smallest trade deficit since November 2020, as exports increased by 4% month-on-month to €52.3 billion while imports decreased by 0.8% to €56.2 billion. Additionally, the Bank of France reported a current account surplus of €2.4 billion in December 2024, switching from a downwardly revised €1.2 billion deficit the previous month, representing the first surplus since July.
Germany's industrial production, according to Destatis, experienced a significant decrease of 2.4% in December, the most considerable drop in five months, primarily due to a decline in car industry output. Economists had anticipated a more modest decline of 0.6%.
