LONDON — European markets climbed on Friday as investors digested key euro zone inflation data and December's U.S. jobs report.
The pan-European Stoxx 600 index closed 1.1% higher provisionally, marking a 3.4% rise for the week — its best performance since mid-November.
All sectors were in the green. Basic resources led gains with a 2.5% rise, as chemicals and energy stocks both rose around 1.9%.
Inflation in the euro zone dropped for a second consecutive month in December. Headline inflation, which includes food and energy costs, came in at 9.2% year-on-year in December, according to preliminary data Friday from the European statistics agency, Eurostat.
It follows November's headline inflation rate of 10.1%, which represented the first slight contraction in prices since June 2021.
Investors may be hoping that falling inflation will pave the way for the European Central Bank to temper its aggressive monetary policy tightening cycle and limit the continent's economic pain. However, analysts do not expect a pivot from the ECB just yet.
Minutes from the last meeting of the U.S. Federal Reserve, published earlier this week, showed policymakers stateside were seemingly unmoved from their hawkish position as they look to bring inflation back down toward target.
Global stocks received a boost during afternoon trade in Europe when Friday's U.S. nonfarm payrolls report showed payroll growth decelerated in December. The Dow Jones Industrial Average was up 1.07% shortly after the open.
Payroll growth still exceeded expectations, however — reinforcing the strength of the labor market despite the Fed's attempt to tame inflation and suggesting there is room for higher interest rates.
Nonfarm payrolls increased by 223,000 for the month, above the Dow Jones estimate for 200,000, while the unemployment rate fell to 3.5%, 0.2 percentage point below expectations.
European stocks end week 3.4% higher
The index gained 1.1% on Friday, taking it up 3.4% for the week.
Analysts told CNBC the inflation data was unlikely to cool the European Central Bank's enthusiasm for rate hikes; but European stocks got an end of week boost from indications of slowing payroll growth in the U.S.
— Jenni Reid
Stocks open higher after better than expected jobs report
U.S. stocks opened higher Friday after investors cheered the December jobs report, which showed the labor market remains resilient but that wages aren't gaining as much as expected amid the Fed's interest rate hikes to tame inflation.
The Dow Jones Industrial Average increased 255 points, or 0.77%. The S&P 500 gained 0.68%, while the Nasdaq Composite jumped 0.44%.
U.S. payrolls rose by 223,000 in December, topping expectations
Friday's U.S. nonfarm payrolls report showed payroll growth decelerated in December but still exceeded expectations — reinforcing the strength of the labor market despite the Fed's attempt to tame inflation, and suggesting there is room for higher interest rates.
Nonfarm payrolls increased by 223,000 for the month, above the Dow Jones estimate for 200,000, while the unemployment rate fell to 3.5%, 0.2 percentage point below the expectation.
"While this will trouble the Federal Reserve, it supports our optimism that the US economy can escape a recession," said Hugh Grieves, fund manager of the Premier Miton U.S. Opportunities fund.
"Chairman Powell will, however, take comfort in the fact that real wage growth is decelerating faster than expected. This will also take the pressure off prices and may reduce the need for further significant, damaging interest rate rises later in the year."
We aren't excited about health-care stocks, Barclays strategist says
Emmanuel Cau, head of European equity strategy at the bank, discusses the outlook for European markets in 2023.
Oil majors that are 'cheap, unloved and trending up' are attractive, strategist says
Fahad Kamal, chief investment officer at Kleinwort Hambros, expects more upside than downside in oil prices in 2023.
Euro zone inflation rate slides to 9.2% as energy price surge cools
Inflation in the euro zone dropped for a second consecutive month in December.
Headline inflation, which includes food and energy costs, came in at 9.2% year-on-year in December, according to preliminary data Friday from the European statistics agency, Eurostat. It follows November's headline inflation rate of 10.1%, which represented the first slight contraction in prices since June 2021.
Despite further signs that inflation is easing, analysts say it is too early to celebrate and do not expect a pivot from the region's central bank.
- Silvia Amaro
CNBC Pro: Goldman Sachs reveals 7 under-the-radar global stocks to buy this year
Many under-the-radar stocks are key to a green energy transition, according to Goldman Sachs — and it expects them to take off in 2023.
The Wall Street bank said the decade-long trend of investing in large clean energy stocks would shift this year, with the focus moving to smaller supply chain firms.
The investment bank identified seven stocks in the Europe, Middle East, and Asia regions that will benefit from the new trend.
— Ganesh Rao
CNBC Pro: Citi's Chronert says a recession is near; shares his 'top conviction calls' to tough it out
Citi's Scott Chronert expects a mild recession in the first half of this year and revealed three strategy calls that could help investors trade the downturn.
He shared three "top conviction calls" with CNBC that could help investors navigate the macro environment.
— Weizhen Tan
CNBC Pro: Veteran investor sees energy as the biggest winner in 2023 — and names the stocks to play it
After a standout performance in 2022, energy stocks are having a slow start to the year.
But veteran investor Louis Navellier is unfazed. He believes the sector is set for another bumper year in 2023, and has a number of stock picks to play it.
Pro subscribers can read more here.
— Zavier Ong
Here are the opening calls
Britain's FTSE 100 is set to add around 18 points to 7,651, Germany's DAX is seen around 38 points higher at 14,474 and France's CAC 40 is expected to gain around 18 points to 6,780.