Europe stocks close lower at end of winning week; telcos drop as Nokia cuts outlook

Jane Foley, head of FX strategy at Rabobank, discusses Europe's economic outlook for the rest of the year.

U.S. stocks opened higher Friday.

The Dow Jones Industrial Average added 150 points, or 0.4%.

The S&P 500 gained 0.2%, while the Nasdaq Composite rose 0.3%.

— Hakyung Kim

Swedish property group SBB ruled out state support as it seeks to repair its damaged finances.

"I don't think we need general support from the state," CEO Leiv Synnes told Reuters. "Our situation is not alarming." Synnes said his focus was on improving liquidity.

The company announced Friday an increase in net operating income for the period of January to June, but reported a pre-tax loss of 11.1 billion Swedish krona ($1.09 billion) in the second quarter.

SBB shares have had a turbulent year and have plunged more than 67% year-to-date. Shares are down more than 90% compared to their peak value in November 2021, according to Refinitiv data.

The company has felt the impacts of Sweden's struggling housing market, which became unstable with the central bank hiking interest rates.

SBB owns properties across Sweden, including hospitals and schools.

— Hannah Ward-Glenton

Matheus Dibo, senior strategist at Goldman Sachs, said there is upside for equity markets in case the U.S. avoids a recession. However, if the economy does dip, a fixed income allocation in the portfolio will help cushion any losses on the equity portion.

Sterling was 0.17% lower against the U.S. dollar Friday morning at $1.311, but still on course for a weekly rise of around 2.3% after hitting a 15-month high, according to Refinitiv data.

The U.K. currency surpassed the $1.3 level for the first time since April 2022 on Thursday, boosted by a fall in the greenback as traders made dovish bets on the Federal Reserve following cooler inflation data.

This week has also seen indicators that will trouble the Bank of England, including strong wage growth; while the U.K. economy contracted by 0.1% in May — less than expected.

— Jenni Reid

Börje Ekholm, CEO of Ericsson, speaks on the telecom company's second-quarter results and where opportunity may lie for the business.

German wholesale producer prices were 2.9% lower year on year in June, official figures showed.

It was the sharpest decline in three years, according to Reuters.

Prices were down 0.2% on the previous month.

German consumer price inflation is falling, but remains high at 6.1%, while the economy has fallen into a recession.

— Jenni Reid

Telecom firms Nokia and Ericsson were sharply lower in morning trade, down by 9.3% and 8%, respectively, at 9:52 a.m. BST.

Finland's Nokia issued a trading update lowering its full-year net sales outlook to a range of 23.2 billion euros ($26.05 billion) to 24.6 billion euros, down from 24.6 billion to 26.2 billion euros. It also narrowed its comparable operating margin range to 11.5% to 13% from 11.5% to 14%.

The company reported a preliminary quarterly result of 5.7 billion euros net sales, below a Refinitiv analysts' estimate of 6 billion euros.

Nokia said the outlook downgrade was related to its Network Infrastructure and Mobile Networks business groups, as it faced headwinds from the macroeconomic environment, with spending by its customers hit by inflation and higher rates, particularly in North America. It said some projects were "slipping to 2024," while there was also "inventory normalization" occurring after two years of supply chain issues.

Sweden's Ericsson reported a 9% year-on-year fall in organic sales, with North America seeing a "sharp decline" but India experiencing growth. It saw a net loss of 600 million Swedish krona ($58.7 million), down from a 4.7 billion krona profit in 2022, which it attributed mainly to restructuring costs.

— Jenni Reid

Luxury British retailer Burberry reported an 18% rise in sales revenue for the quarter ending July 1, as earnings season gets underway.

Sales in Europe, the Middle East, India and Africa were up 17%. But its biggest successes came in Asia, with mainland China sales up by 46%, south Asia-Pacific up 39% and Japan up 44%. Sales in the Americas declined by 8%.

The company reiterated its full-year guidance and announced a £400 million share buyback to be completed by the end of the calendar year.

— Jenni Reid

European stocks look set for a lower open Friday, according to data from IG. The U.K.'s FTSE 100 is heading for a 15.5 point fall to 7,427, while Germany's DAX is set to open 14.4 points lower at 16,130. France's CAC 40 and Italy's MIB were seen opening lower by 13.8 and 26 points, respectively.

— Jenni Reid

The fund manager behind a fixed-income fund offering 10% in dividends has predicted a "deterioration in credit" for the wider economy in the near future.

However, the portfolio manager expects the fund to be well-position for such a scenario while generating market-beating income.

It is among only a handful of funds available to retail investors across Europe that currently offers double-digit yields.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Funding in fintech startups dropped 49% globally to $23 billion in the first half of 2023 as compared to a year ago, S&P Global Market Intelligence data showed.

Deal counts in the first six months of 2023 totaled 1,178 — a 64% plunge from the same period last year.

Meanwhile, mega funding rounds of more than $100 million have been scarce, with only nine in second quarter 2023, when it was 23 in first quarter 2023 and 55 in second quarter 2022, said S&P.

The failure of Silicon Valley Bank in March "dampened investor risk appetite," said S&P.

"A trio of big-ticket deals — Stripe's $6.87 billion, an Ant Group unit's $1.5 billion and PhonePe's $850 million— masked the deterioration in the fintech funding environment in the first half of 2023," said Sampath Sharma Nariyanuri, fintech research analyst at S&P Global Market Intelligence.

However, Nariyanuri expects "a recovery in public market valuations of tech stocks, a stabilization in interest rates and a pickup in M&A activity" to boost the second half of 2023.

— Sheila Chiang

The International Monetary Fund said that growth in China is slowing due to weaker private investment as well as slowing exports and reduced domestic demand.

The organization's spokesperson Julie Kozak said in a briefing, "Growth momentum has been slowing recently in China, largely due to weaker than expected private investment" pointing to a recent decline in exports after seeing strong performance in the first quarter of the year.

"The overall picture for growth in China is one of a slowing economy, and that is consistent with the forecast that we that we had in in April," noting an "updated forecast" for China will be reflected in IMF's next World Economic Outlook.

— Jihye Lee

The producer price index, a measure of what wholesalers pay for goods, rose 0.1% in June. Economists polled by Dow Jones expected an increase of 0.2%. Core PPI, which strips out volatile food and energy prices, climbed 0.1% — also less than expected.

— Fred Imbert

Reserve Bank of Australia's deputy governor Michele Bullock has been appointed as the new central bank chief, the country's Treasury said Friday.

She succeeds incumbent Philip Lowe, whose term will end on September 17 — that brings a close to his 43 years at the bank. Treasurer Jim Chalmers described Bullock's appointment as "the optimal balance between providing exceptional experience & expertise and offering a fresh leadership perspective."

Bullock's appointment would mean that the RBA will have a vacant deputy governor's post, which the government said that it will fill in the coming months.

— Lim Hui Jie

Federal Reserve Board Governor Christopher Waller voiced the need for two more rate hikes for inflation to be brought down to its target.

"I see two more 25-basis-point hikes in the target range over the four remaining meetings this year as necessary to keep inflation moving toward our target," he said, speaking at at event at New York University on Thursday.

He called the latest consumer price index reading that showed a cooling inflation rate as "welcome" news, while adding, "one data point does not make a trend."

"I am going to need to see this improvement sustained before I am confident that inflation has decelerated," he said.

— Jihye Lee

Bank of America has described the AI opportunity within the software industry as "undeniably vast" and ranked European companies in the sector.

"We see gen AI as an opportunity for the Software industry to derive both potential revenue uplift via enhanced value proposition and data monetization, alongside productivity improvements," the bank said.

CNBC Pro subscribers can read more here.

— Lucy Handley

In another bullish sign for the market, the S&P 500 is now up 3.3% since the Fed started raising rates in March 2022. The move comes as traders cheer the prospects of the central bank taming inflation without tipping the economy into a recession.

"For first time in 2023 we are currently being asked by multiple clients if we think the S&P 500 is now on track to clock an ATH before year end. I am going with a yes on this," Goldman Sachs' John Flood wrote in a note Wednesday.

— Fred Imbert