Markets

European stocks close mixed as EU leaders meet for stimulus talks; autos up 1.5%; Ericsson soars 11%

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Key Points
  • European leaders met in Brussels on Friday looking to hash out a deal on the proposed 750 billion euro ($853.8 billion), which could face opposition from the "frugal four" member states.
  • Daimler revealed ahead of its July 23 earnings report that it will post a smaller-than-expected operating loss of 1.68 billion euros for the second quarter.

European stocks closed mixed Friday as European Union leaders discussed a deal on the bloc's key coronavirus recovery package, while U.S. cases continued to soar.

After a cautiously optimistic open, the pan-European Stoxx 600 was hovering just above the flatline at the close. Autos jumped 1.5% while banks fell 1%.

Stocks followed the cautious tone seen overnight in Asia, where markets were a mixed bag on the last day of the trading week.

EU leaders met in Brussels on Friday looking to hash out a deal on the proposed 750 billion euro ($853.8 billion), which could face opposition from the "frugal four" member states of Austria, Denmark, Sweden and the Netherlands. The bill may also be subject to a veto from Hungary, which has opposed linking the distribution of funds with the upholding of the EU's democratic values.

Market focus also remains attuned to the consistent rise of coronavirus cases in the U.S., with a Reuters tally putting new cases on Thursday at 77,000, by far a new daily record.

U.S. unemployment claims data also slightly underwhelmed on Thursday, as the initial jobless claims figure came in at 1.3 million for the week ending July 11, the Labor Department said, missing expectations from economists polled by Dow Jones for 1.25 million new filings. On Wall Street Friday, U.S. stocks slipped as a decline in Netflix shares pressured the rest of the market.

Sino-U.S. tensions have also weighed on sentiment after Reuters reported Thursday, citing a source, that U.S. President Donald Trump's administration is mulling a stateside travel ban on all members of the ruling Chinese Communist Party (CCP) and their families.

The Institute for International Finance said in a report Thursday that global debt surged to a record $258 trillion in the first quarter of 2020, amounting to 331% of global GDP (gross domestic product), and is continuing to rise.

In Europe, British Airways has retired its entire fleet of Boeing 747 aircraft on the back of the downturn in global travel demand brought about by worldwide shutdown measures during the pandemic.

Earnings in focus

Earnings season continues to gather steam, with Daimler revealing ahead of its July 23 earnings report that it will post a smaller-than-expected operating loss of 1.68 billion euros for the second quarter. The German automaker also announced Thursday that it will cease production of Mercedes-Benz sedans in the U.S. and Mexico in a bid to cut costs. Daimler shares gained 4.3%, leading a broad rally for the automotive sector.

Rio Tinto on Friday reported a 1.5% rise in iron ore shipments, citing improving demand from China as the world's second-largest economy emerges from the coronavirus pandemic. The British metals and mining giant's stock edged 2.3% higher.

Danske Bank beat expectations for second-quarter net profit but warned of further job cuts as part of a four-year cost reduction strategy, as the Danish lender attempts to recover from a 2017 Estonian money-laundering scandal. The bank's stock fell 1% on Friday.

Ericsson also beat profit estimates on the back of stronger margins on telecoms equipment sales, leading the Swedish company to reaffirm its 2020 and 2022 financial guidance and sending the stock 11% higher. Swedish Match also climbed 10% after reporting a better than expected second-quarter profit rise.

At the other end of the European blue-chip index, Swedish chemicals manufacturer Hexpol fell 8.8% after disappointing second-quarter earnings, and compatriot real estate company Samhällsbyggnadsbolaget dropped 6.9%.