Published : 1 month ago, on 01/11/2024

By Pranav Kashyap

(Reuters) –European shares climbed on Friday, buoyed by a rally in energy stocks, but remained on track for their worst week in nearly two months as a tightly contested U.S. presidential election kept investors on edge.

The pan-European STOXX 600 index rose 0.5% to 508.05, after falling more than 1% in the previous session.

The benchmark was poised to record a drop of about 2% this week, marking its second consecutive weekly decline.

As the Nov. 5 U.S. presidential election approaches, the race remains too close to predict, with opinion polls showing a virtual dead heat.

Investors are placing their bets on the possibility of Republican candidate Donald Trump returning to presidency, although he is neck-and-neck with Vice President Kamala Harris in several polls.

This heightened uncertainty has driven investors to safe-haven assets, driving up the U.S. dollar and gold, which hit a record high this week.

In the current session, the energy sector was the biggest boost to the index, gaining 1.4% as oil prices surged on reports that Iran was preparing a retaliatory strike on Israel from Iraq in the coming days. [O/R]

Reckitt surged 10% after the consumer goods group was cleared of liability in the latest preterm formula case.

The travel sector fell 0.5% due to a 2.6% drop in Lufthansa shares after HSBC downgraded the stock to “hold” from “buy”.

For the week, the banking sector gained the most, driven by upbeat results from French bank Societe Generale. The food & beverages sector declined the most, dented by dour results from spirits maker Campari.

Meanwhile, earnings reports from Wall Street giants such as Meta and Microsoft indicate that Big Tech is increasing its investments in AI. However, the absence of rapid and substantial returns has raised concerns among investors.

Apple reported its earnings overnight, missing its fourth-quarter estimates for sales in China. [.N]

On the macro front, data showed that the Swiss consumer price index rose 0.6% in October. Its benchmark index was up 0.7%.

With a relatively light data day in Europe, investors will turn their focus to the U.S. non-farm payrolls data due later in the day.

A 25 basis point cut from the Federal Reserve (Fed) next week should be nailed on, and today’s labour market data is unlikely to change this,” said Max McKechnie, Global Market Strategist at J.P. Morgan Asset Management.

(Reporting by Pranav Kashyap in Bengaluru; Editing by Subhranshu Sahu and Saumyadeb Chakrabarty)