European markets saw gains on Friday, concluding what appears to be a successful week for global stocks. The pan-European Stoxx 600 index increased by 0.2% in early trading, with the automotive sector leading the way with a 1.1% rise. Over the course of the week, the Stoxx 600 has climbed more than 2%, positioning it for its strongest performance since early May.
Similarly, U.S. stocks have experienced solid gains. A significant boost came on Thursday when it was reported that weekly jobless claims had fallen and U.S. retail sales had exceeded expectations. This data helped ease investor concerns about a potential U.S. recession, fears that had contributed to a sharp global sell-off earlier in the month. Analysts also noted that some of the recent market volatility could be attributed to the typical August trading pattern, where activity tends to be lighter.
Despite these gains, the Stoxx 600 and Wall Street’s S&P 500 are still below the levels they were at the start of the month. However, the steady upward movement throughout the week has helped recover some of the losses from the earlier downturn.
In the U.K., retail sales data released on Friday showed a recovery, with a 0.5% increase in July following a 0.9% decline in June, meeting expectations. Over the three months to July, sales volumes rose by 1.1%. Alex Kerr, a U.K. economist at Capital Economics, noted that the growth was not widespread across all sectors, with some areas like food, clothing, and household goods continuing to struggle. Nevertheless, Kerr expressed optimism that as inflation decreases and real incomes rise, consumer spending growth should pick up in the coming months.
This news followed a report that U.K. inflation rose to 2.2% in July, which was less than anticipated, and the economy grew by 0.6% in the second quarter. The British pound strengthened against the U.S. dollar, reaching $1.288, its highest rate in two weeks, and also saw slight gains against the euro.
The positive sentiment also extended to Asia-Pacific markets, which followed the encouraging U.S. data to finish the week on a high note.
JPMorgan European Discovery Trust plc (LON:JEDT) is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.
