LDN - Business

European shares head for best week since November, inflation data in focus

[January 06, 2023] By Bansari Mayur Kamdar

(Reuters) -European shares were poised for their best week in eight, even though the benchmark index struggled for momentum on Friday as investors awaited euro zone inflation and U.S. jobs figures for more clues on the pace of future interest rate hikes.

The pan-European STOXX 600 was flat by 0915 GMT. For the week so far, it was up 3.4% following a drop in natural gas prices and upbeat economic data.

Data showed retail sales in Germany rose in November, adding to a slew of positive numbers this week that have indicated a milder-than-expected recession and an easing of price pressures in some countries.

All eyes are on the December euro zone inflation data due at 1000 GMT, with economists expecting prices to have declined year-on-year for a second consecutive month.

"Inflation readings in the euro zone were not all good news, and core inflation remains high," analysts at UBS Global Wealth Management said in a note. "Despite the encouraging data (this week), we expect central banks to stick with a hawkish stance at this time."

Also in focus is the U.S. non-farm payrolls report after private payrolls data on Thursday showed a bigger-than-expected rise in employment and a drop in jobless claims, underscoring a tight labour market and rekindling fears of further tightening by the Federal Reserve.

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The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, January 4, 2023. REUTERS/Staff

Weighing on the STOXX 600 index, rate-sensitive technology stocks fell 0.5%. They were still headed for their best week since November, gaining nearly 5.4% so far.

Healthcare stocks rose in early trading, with Roche Holding AG jumping 1.5% after the Swiss pharmaceutical company said the U.S. Food and Drug Administration had granted priority review to its bispecific antibody Glofitamab.

Chrysler parent Stellantis NV fell 1.4% after Chief Executive Officer Carlos Tavares warned of more auto plant closures.

Shell rose 0.9% after the oil major said earnings from its natural gas trading operations were likely to have risen significantly in the fourth quarter of last year, despite a sharp output drop due to plant outages.

The energy sector gained 0.7% as crude prices firmed on hopes of higher demand from China and data showed lower U.S. fuel inventories following a winter storm at the end of last year.

China-exposed miners added 0.9% as copper prices rallied.

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Vinay Dwivedi and Subhranshu Sahu)

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