European Shares Rise on Positive Earnings and Fed Rate Cut Hopes

European shares saw a significant rise on Friday, marking their second consecutive weekly gain. The boost was driven by positive earnings reports and global investor optimism surrounding a potential September interest rate cut by the Federal Reserve. Sweden's Addtech and Ericsson posted notable gains, contributing to the overall market uplift.

European shares advanced on Friday and logged their second consecutive weekly gains on upbeat earnings and global investor optimism about a September interest rate cut by the Federal Reserve. The pan-European STOXX 600 index closed up nearly 0.9%, while the euro zone blue-chip gauge advanced 1.3%, both indexes hitting their highest levels in over a month on an intra-day basis.

Sweden's Addtech soared to a record high, rising 16% on favorable future projections, while Ericsson climbed 4.3% following better-than-expected earnings. Sweden's benchmark index jumped 2.2%. Elsewhere, Norwegian Air surged 7.8% after surpassing second-quarter earnings expectations despite lower ticket price impacts. According to BofA Global Research strategists, while strong Q2 earnings may bolster near-term STOXX 600 EPS momentum, they anticipate future downgrades due to weakening global economic growth.

In the United States, the earnings season commenced with major banks like JPMorgan Chase, Wells Fargo, and Citigroup reporting their Q2 results. France's CAC 40 rose 1.3% following a turbulent election week. Year-on-year consumer prices in France increased by 2.5% in June, while German wholesale prices declined by 0.6%.

Investor sentiment remained buoyant, supported by expectations of a September Fed rate cut after U.S. consumer prices fell unexpectedly, despite an uptick in producer prices reported on Friday. Among other stocks, Swiss firm EMS Chemie dropped 4.9% after cutting 2024 sales guidance, and Axfood fell 9.0% due to operational costs. Aker BP reported a lower-than-expected Q2 profit but saw its shares rise by 3%.

(With inputs from agencies.)