FRANKFURT: European shares ended the week on a strong note but were a little lower on Friday as investors turned cautious ahead of Fitch’s credit rating decision on France later in the day.
The pan-European STOXX 600 ended 0.11 percent lower at 554.74 points, as healthcare led sector losses with an over 1 percent drop. Swiss pharmaceutical company Novartis lost 2.8 percent after Goldman Sachs’ downgrade, citing rising competition from generics. Its peer, Zealand Pharma also dropped 4.1 percent in sympathy.
European aerospace and defence stocks extended their record-setting run, up 0.7 percent on Friday to a new high. The index was the top performer for the week, surging 6 percent to its biggest weekly rise in more than four months as it leveraged simmering geopolitical tensions after Poland shot down a possible Russian drone.
“The incursion of Russian drones into Polish airspace this week has been met with deep concern. At the very least, it will support policymakers’ efforts to continue raising spending on defence,” Liam Peach, senior emerging markets economist at Capital Economics, said in a note.
Banks jumped about 4 percent for the week, staging a rebound after weakness in late August.
The benchmark STOXX 600 index was poised for its first gain in three weeks, up 1 percent. The move was inspired by global equities, which firmed this week on expectations of multiple US interest rate cuts. Traders have fully priced in a Federal Reserve cut next week, according to the CME Group’s FedWatch Tool.
The European Central Bank left rates unchanged on Thursday as expected, but its upbeat view on growth and inflation dampened expectations for further easing.
The focus this week was also on French political chaos after the country appointed its fifth prime minister in under two years, as the minority government failed to unite parliament over plans for debt-fuelled fiscal spending. French bond yields, which jumped sharply last week on concerns about the economy’s high debt, face another test later on Friday as Fitch is expected to downgrade France’s credit rating.
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