European stocks rose nearly 1% on Friday at the end of a week that was battered by concerns over a spike in energy prices, red-hot inflation and higher bets of an interest rate hike by the European Central Bank next week.
The pan-European STOXX 600 rose 0.8%, snapping five sessions of losses, although the index was set for a weekly decline of 3.5% - its third straight week in the red.
“It’ll be interesting to see if Europe can maintain today’s rebound considering we’re heading into the weekend not certain that gas will start flowing through Nord Stream 1 again tomorrow,” said Craig Erlam, senior market analyst at OANDA.
Flows of Russian gas via the Nord Stream 1 pipeline to Germany remained at zero on Friday morning after Russia’s Gazprom halted supplies for a three-day maintenance outage on Aug. 31.
“Until the gas starts actually flowing, it remains a risk and may make investors a little nervous as we progress through the session,” Erlam added.
Investors this week sharply raised their bets on a large 75 bps rate hike from the ECB at its meeting next Thursday following hawkish commentary from policymakers and another record high inflation print in August.
Money markets priced in an 80% chance of a 75 bps hike at the meeting, compared with less than 50% last Friday, per Refinitiv data. Shares of Credit Suisse rose 2.1% following reports that Switzerland’s second-biggest bank is considering cutting around 5,000 jobs in a cost-reduction drive.
Ryanair firmed 0.7% as the Irish low-cost carrier saw a record number of passengers in August for the fourth straight month.
Philips slumped to its lowest level since July 2012 after a subsidiary of the Dutch medical device maker agreed to pay more than $24 million to resolve alleged false claims over respiratory-related medical equipment, the US Justice Department said.
European shares get September off to bad start
Lacklustre August sales by Volvo Cars pushed shares of the Swedish automaker down 1.4%.
Miners stared at the biggest losses, shedding more than 8% this week as metals’ prices dropped on renewed concerns that China’s zero-tolerance COVID-19 policy and rate hikes would dent demand for commodities.
All major regional stock markets were poised for weekly losses.
Europe’s wealthiest nations face rising risks of civil unrest over the winter due to high energy prices and costs of living, according to a risk consultancy firm.
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