Both the STOXX 50 and STOXX 600 hovered around the flatline on Friday, as investors adopted a cautious stance ahead of key macro and geopolitical developments.
European shares muted on Friday
Market participants were focused on the evolving trade dialogue between US President Donald Trump and Chinese President Xi Jinping, following a call between the two leaders on Thursday in which they agreed to resume trade negotiations. While the resumption of talks was seen as a positive step, the lack of specific commitments or a clear timeline kept risk appetite subdued, with investors hesitant to make aggressive moves ahead of tangible outcomes.
Adding to the wait-and-see mood was anticipation surrounding the latest US nonfarm payrolls report, due later in the day, which could influence expectations for the Federal Reserve’s monetary policy path. A weaker-than-expected ADP jobs figure earlier in the week raised concerns about labor market momentum, prompting increased sensitivity to the upcoming official data release.
In Europe, sentiment was further tempered by mixed macroeconomic signals. The European Central Bank, as expected, cut interest rates by 25 basis points in its June meeting, marking the beginning of a cautious easing cycle. However, ECB President Christine Lagarde hinted that the rate-cutting campaign may already be nearing its end, citing progress on inflation and stable economic conditions, which prompted some repricing of future easing expectations.
Disappointing economic data from Germany also weighed on sentiment. German exports declined more than forecast in April, while industrial production contracted unexpectedly, renewing concerns about the health of Europe’s largest economy amid ongoing trade headwinds and sluggish global demand.
Apparel and auto sectors underperformed
On the corporate front, the apparel and auto sectors underperformed. Shares of Adidas (-0.9%) and Puma (-1.8%) declined after US-based Lululemon Athletica trimmed its annual profit forecast, sparking concerns about consumer spending trends and inventory build-ups across the sector. In the automotive space, Airbus (-0.9%), Volkswagen (-0.7%), and BMW (-0.9%) also ended lower, pressured by broader cyclical weakness and lingering uncertainties over tariffs.
In contrast, gains in utility and healthcare names helped limit broader losses. RWE rose 0.9% amid continued investor interest in energy transition plays, while Bayer advanced 1% following favorable analyst commentary related to its pipeline assets and ongoing restructuring efforts.
Despite Friday’s muted session, European equities posted modest gains for the week. The STOXX 50 rose 0.7%, while the broader STOXX 600 added 0.6%, supported by earlier optimism around monetary easing and tentative progress on the trade front.
