European markets edged higher on Friday, lifted by financial and mining stocks, with uncertainty over a US-China trade deal limiting gains fueled by dovish signals from the US Federal Reserve this week.
Fed Chair Jerome Powell confirmed that the US economy was still under threat from disappointing factory activity, tame inflation and a simmering trade dispute, and said the Fed stood ready to “act as appropriate.”
The pan-European STOXX 600 edged up 0.04 percent to 386.85, lifted by an increase in basic resources stocks as China iron ore logged its best week since about the middle of last month. Banks rose 0.7 percent.
Meanwhile, data out of China showed that Beijing’s exports fell last month as the US ramped up trade pressure, while imports shrank more than expected, pointing to further strains on the world’s second-largest economy.
“The export data was really weak, and it’s one signal that the trade war has started to bite Chinese exporters and that companies are starting to reroute their supply chains,” said Stefan Koopman, senior market economist at Rabobank NV in Utrecht, the Netherlands.
“European markets are waiting for a cue on what is happening between the United States and China on trade,” he said.
Regional markets have regained their footing after a huge sell-off in May due to an escalation in US-China trade tensions on expectations of rate cuts by major central banks.
Friday’s moves capped a tepid week and set the main index to post its first weekly loss in six weeks, in contrast to world stocks that are on course to end the week higher.
The STOXX 600 fell 0.8 from last week’s 390.11.
Putting a damper on trade deal hopes, US President Donald Trump on Thursday said that China was not living up to promises it made on buying agricultural products from US farmers.
Among stocks, Daimler AG slipped 0.8 percent after the luxury automaker warned investors that it expected to swing to a second-quarter loss before interest and taxes of 1.6 billion euros (US$1.81 billion).
“It’s highly indicative on what is happening on trade over the last couple of months. We’ve seen carmakers have difficulty, with Chinese car sales dropping over the past six to 12 months,” Koopman said.
Healthcare stocks slipped as drugmakers resumed their slide after the White House said it was ditching a key plan to lower US drug prices, raising the possibility of new measures focused on drugmakers.
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