European equity markets extended gains on Friday to record their best week since March after a strong start to the Q3 earnings season powered buying. Banks were among the top performers after forecast-beating quarterly results from US biggest lenders on Thursday. Investors also welcomed the news that next week European Union leaders are set to approve emergency measures to provide short-term relief to households and businesses amid an unprecedented energy crisis. On the economic data front, recent figures showed European car registrations slumped by 23.1% in September. Among single stocks, German fashion retailer Hugo Boss climbed 1% as the company raised its outlook for the current year after third-quarter earnings rebounded on the back of strong demand. Frankfurt’s DAX surged 2.5% this week to 15,587, the highest close since September 27th and the biggest weekly rise since March.
Wall Street rallied on Friday to book a winning week as investors piled back into economically sensitive cyclical stocks after more strong earnings reports and an upbeat surprise in retail trade data. Retail sales in the US unexpectedly rose for the second month in September, a sign of resilience from consumers. Meanwhile, the earnings season continues with results from Goldman Sachs smashing forecasts. On Thursday, eight S&P 500 companies reported quarterly results with each topping estimates, led by financial giants Bank of America, Morgan Stanley and Citigroup. The Dow Jones climbed 382.2 points, or 1.1%, to 35,294.76; the S&P 500 added 0.8% at 4,471.37 and the Nasdaq Composite rose 0.5% to 14,897.34. The three major indexes closed the week higher.
The FTSE 100 advanced 1.9% to a near 20-month high of 7,234 this week, the most since April buoyed by gains in banking and commodity-related stocks as traders look past inflation concerns and focus on strong earnings reports while oil and metal prices continue to surge. Elsewhere, the UK and EU are starting a new round of negotiations on Northern Ireland after London demanded extensive changes, while financial regulators in China told some major banks to ease the approval of mortgages amid fears of contagion of the China Evergrande Group's debt crisis. Among single stocks, HSBC Holdings added 1.9% after Barclays and Bank of America raised their price targets on the stock, while Rio Tinto Group fell 1.4% on Friday after it reduced its 2021 iron ore shipments forecast.
The CAC 40 closed 42 points or 0.6% higher at 6,728 on Friday, its highest level since September 6th, as optimism about the earning season pushed back concerns about rising inflation. Bank stocks went up on the back of rising government bond yields, namely Credit Agricole closed 2.1% higher and BNP Paribas gained 2%, while Renault shares rose to the top, closing 3.5% higher. On the earnings front, gambling operator Française des Jeux reported a 5.1% increase in Q3 turnover to €529 million and confirmed its 2021 outlook, underscoring that it had seen growth across all activities. On the data front, the annual inflation rate in France was revised higher to 2.2% in September, pointing to the steepest rise in consumer prices since October 2018, driven by service charges and energy prices. For the week, the key French stock index climbed 2.6%.
The FTSE MIB rose 0.8% to 26,489 on Friday, the highest since August 13th and extending a 1.2% gain in the previous session, as strong quarterly earnings results weighed positively on investors' sentiment and helped to lull the recent inflation jitters. The banking and energy sectors continued to boost the index as oil prices hit 82$ a barrel, while better-than-expected quarterly results from US financial giants continued to spill on Italian shares. The key stock index closed the week with 1.7% gains, the most in nine weeks.