European Stocks Edge Higher; BNP Paribas Gains on Solid Earnings

© Reuters.

By Peter Nurse 

Investing.com - European stock markets edged higher Friday, helped by strong earnings from the likes of BNP Paribas (PA:BNPP) as well as optimism that the worst of the pandemic is over, and hopes that Mario Draghi will be able to steady the ship in Italy, the EU's third-largest economy.

At 3:35 AM ET (0835 GMT), the DAX in Germany traded 0.1% higher, the CAC 40 in France rose 0.8%, and the U.K.'s FTSE index climbed 0.1%. The FTSE MIB also rose 0.7% as Italy's 10-year yield spread over Germany fell back below 100 basis points.

The euro zone has been hard hit by the second wave of the Covid-19 pandemic, with the region’s GDP falling by 0.7% in the final quarter of 2020 as governments introduced new restrictions and lockdowns to try to curb the virus. 

More evidence of this slowdown emerged Friday, as German factory orders fell 1.9% in December, a sharp drop from the revised 2.7% gain the previous month.  

Growth in the first quarter of the new year is also likely to be negative, but there is hope ahead. The Bank of England, for example, while keeping its monetary policies unchanged Thursday, said the U.K. economy is heading for a rapid pickup thanks to a bold vaccination effort. Government projections put the country on course to vaccinate every adult by June.

“With Covid-19 cases now declining in certain regions, including the U.S. and the U.K., there will be a glimmer of hope that the worst is now behind us, particularly as the rolling out of vaccinations picks up,” said analysts at ING, in a research note.

Also helping the tone Friday is the release of more solid earnings data. 

BNP Paribas (OTC:BNPQY) stock rose 0.8% after the French bank provided upbeat guidance for 2021, helped by strong trading figures in the fourth quarter of last year. It also announced a dividend payout in May.

Sanofi (NASDAQ:SNY) stock rose 2.9% after the French drugmaker said it aimed to grow earnings per share this year after posting stronger-than-expected quarterly results.

Carlsberg (OTC:CABGY) stock climbed 3.1% after the Danish brewer beat full year net profit expectations, helped by a strong rebound in China, and proposed new stock buybacks. 

Away from Europe, the focus will be on the official U.S. employment report later in Friday’s session, with job growth expected to have rebounded in January as authorities began easing restrictions on businesses.

Oil prices firmed Friday, reaching their highest levels in a year as global stockpiles continue to shrink against a backdrop of output discipline by major producers.

U.S. crude futures traded 0.7% higher at $56.67 a barrel, after touching a high of $56.84, its highest since Jan. 22 last year, and is on track for a weekly gain of nearly 9%, which would be its biggest weekly gain since October.

The international benchmark Brent contract rose 0.6% to $59.34, after hitting a high of $59.41, its highest since Feb. 20 last year, and on track to rise 6% this week.

Elsewhere, gold futures rose 1.1% to $1,809.10/oz, while EUR/USD traded 0.2% higher at 1.1981.