DOW FELL WHILE EUROPEAN EQUITY REMAIN RESILLIENT

The Dow Jones pared earlier losses and closed slightly below the flatline on Friday, while the S&P 500 and Nasdaq 100 lost 0.1% and 0.3%, respectively, pressured by an unexpected rise in long-term consumer inflation expectations along with ongoing worries about the debt ceiling. The University of Michigan consumer sentiment sank in May and inflation expectations for the next five years were the highest since 2011. Meanwhile, shares of PacWest resumed losses and fell nearly 3%. Tesla shares also pared early gains and finished 2.4% lower, as the company raised prices of its Model X and Model S cars in the US and Elon Musk selected a new CEO for Twitter. At the same time, investors are keeping a close eye on the debt ceiling impasse, as news revealed that a meeting between President Biden and congressional leaders planned for Friday was postponed to next week. So far this week, the Dow Jones and the S&P 500 lost 1% and 0.1%, respectively, while the Nasdaq gained 0.7%.

European equity markets rose on Friday, with the benchamrk Stoxx 600 up 0.4% and the German DAX rising 0.5% boosted by upbeat corporate updates. The luxury sector received a boost after Richemont (+3.5%) exceeded profit and sales expectations due to strong demand from China. Similarly, shares of Societe Generale rose 1.2% after the bank's earnings surpassed forecasts. On the other hand, while Allianz profits surged by 329%, the reading was lower than expected. For the week, the DAX lost nearly 0.5%.

The FTSE 100 added 0.3% to 7,755 on Friday, halting three consecutive sessions of losses with support from a batch of upbeat corporate news as investors digested Britain’s latest growth data. The UK’s economy expanded by 0.1% on the quarter in the first three months of the year, the same as the previous period and in line with market expectations. The results came shortly after the BoE delivered its largest upward revision to growth expectations on record, forecasting the GDP to be flat in the first half of this year and picking up considerably in 2024 and 2025, despite the renewed hawkish outlook. On the corporate front, Beazley advanced 3% after posting strong premium growth in the first quarter, and Pearson added 1.4% after the upgrade from Morgan Stanley. Meanwhile, GSK shares rose nearly 2% after a favorable ruling for its Zantac drug in Canada.

The CAC 40 index closed 0.5% higher at 7,415 on Friday, tracking broad gains for other European bourses with support from robust corporate results. Financial companies in Paris lead the gains after Societe Generale posted better-than-expected revenues and net profit. Tracking the positive momentum for the sector, BNP Paribas advanced 2% and Credit Agricole jumped 1.4%. On the other hand, heavy-weighing luxury brands failed to maintain gains from earlier in the session and closed mixed, despite the strong results from Swiss rival Richemont. On the domestic data front, final figures confirmed that inflation in France rose to 5.9% in April.

The FTSE MIB index closed 0.9% higher at 27,350 on Friday, recovering from three sessions of declines to close the week flat amid upbeat corporate earnings. Leonardo and Pirelli shares led the gains in the session, adding 4% and 3.5%, respectively, after posting strong quarterly results. On top of that, CNH Industrial and Recordati both closed sharply higher after beating profit estimates for the first three months of the year and raising their guidance for the rest of 2023. Still, some caution prevailed during the session as investors awaited a potential credit rating downgrade by Fitch due after the closing bell.

The Ibex 35 rose by 0.56% to 9,234 on Friday, in line with its European peers, as investors digested latest corporate results. Ferrovial was the top performer, growing by 1.92% after posting a 39% increase in first-quarter net earnings due to higher tolls and sales and a strong mobility recovery in North America. Acerinox also recorded solid gains of 1.60% on an improved Morgan Stanley recommendation. By contrast, Melia Hotels constrained the upward momentum, plunging by 5.56%. Even though the company reduced the losses of the first quarter of the year by 99%, it failed to convince the market. Additionally, Acciona Energia slid by 4.52%, ACS - by 1.42%, and Merlin Properties - by 0.73% after presenting their accounts. On the macroeconomic front, inflation accelerated in April, but food prices seem to have finally peaked. On the week, the index was almost flat.