European markets remain steady despite strong U.S. GDP growth

European markets were cautiously higher on Friday, after U.S. economic data came in stronger than expected. A number of rate hike decisions are due next week, which may provide further direction for markets.

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The Stoxx 600 index was down slightly in early afternoon trading, with German and French bourses also down slightly. Oil and gas stocks gained 1.1% while food and drink stocks fell 1%.

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Investors are processing a mixed performance from corporate earnings released this week, with the start of year rally stuttering. While some companies have posted strong results, others have disappointed, leading to a mixed reaction from the market. Overall, the earnings season so far has been mixed, with some bright spots but also some disappointments.

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On Friday, the French consumer confidence data for January was released, showing that current household confidence and unemployment worries remained stable, but living standards and future expectations declined.

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The United States will release data on core inflation, personal income and spending, and pending home sales. The economy expanded by 2.9% year-on-year during the fourth quarter, beating expectations, though recession fears remain. Earlier in the week, the German government and research group Ifo said that Europe's largest economy would likely avoid a recession this year. This is good news for the German economy, which has been struggling in recent years.

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All economic data will be closely watched in the coming week, as central banks are set to take center stage. The Federal Reserve will meet Tuesday and Wednesday, while the European Central Bank and Bank of England will announce their interest rate decisions on Thursday.
Asian shares traded higher on Friday, though U.S. futures were slightly lower.

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Sunaina Sinha Haldea, global head of private capital advisory at Raymond James, discusses the potential implications of the ongoing political wrangling over the U.S. debt ceiling and the risk of default. She notes that while the situation is still unfolding, it could have significant implications for markets if it is not resolved soon.
Wise shares fell 2% on Friday after the company was accused by rival fintech startup Atlantic Money of undermining competition in the money transfer market.
In a letter to the Competition and Markets Authority, Atlantic Money said that Wise had unfairly removed it from the price comparison section of its website and refused to include it on a foreign exchange fee comparison site that Wise also owns, called Exiap.

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Atlantic Money said it believed Wise's conduct was "harmful to competition across the UK and EU and, we would submit, ultimately results in higher fees for end consumers." The letter could be a precursor to a formal investigation as to whether Wise is in breach of competition law. We have decided to remove Atlantic Money from our platform for the time being due to operational reasons, including customer queries about their business. We take compliance with all applicable laws very seriously and want to ensure that our platform is in compliance with all regulations.

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British Finance Minister Jeremy Hunt signaled on Friday that he is pushing ahead with tax hikes, while stressing the need to develop Brexit into a "catalyst" for U.K. growth. Hunt said that the best tax cut right now is a cut in inflation, in a speech addressed to tech giants including Amazon, Google and Meta. He added that he is looking to dispel economic "gloom" in the U.K.

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The British pound fell against the dollar after UK Foreign Secretary Jeremy Hunt gave a speech on Brexit. The pound recovered some of its losses from when Hunt began speaking, but pulled away from the six-week high it hit on Thursday.

This year has seen a remarkable comeback for tech stocks, as investors flock back to the sector. The tech-heavy Nasdaq Composite is up more than 8% in 2023, outperforming both the Dow Jones Industrial Average and the S&P 500. Despite the recent rally, few believe the downturn in tech has bottomed. However, Morgan Stanley believes investors should not sit on the sidelines. The firm believes there are still opportunities to be had in the tech sector, even in the midst of a downturn.

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The Stoxx 600 index opened flat on the previous session as investors continued to chew over corporate earnings and U.S. economic data.
H&M's stock dropped 7% in early trading after the company reported a bigger than expected drop in operating profit. H&M attributed the drop to a cost efficiency program and its exit from Russia.

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Sainsbury, a British supermarket, topped the index after Bestway, a retail group, announced it had built up a 3.45% stake in the business. Sainsbury's stock rose 5.6% on the news.

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The funds are the only ones among 7,000 equities ETFs trading worldwide to:
European markets are heading for a mixed open on Friday, with some continuing Thursday’s positive momentum and others stalling this week.
The FTSE 100 index is expected to open 5.5 points higher at 7,768, while the DAX is seen 16 points higher at 15,142. Italy's FTSE MIB is expected to open 50 points higher at 26,308. However, France's CAC is seen down 4.5 points at 7,092, according to data from IG.

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H&M and Signify will release earnings data today, as well as French consumer confidence data for January.
Dave Sekera, chief U.S. market strategist for Morningstar, believes that this year will be a "tale of two halves." He expects the first half of the year to be challenging, with potential headwinds coming from trade tensions and slowing global growth. However, he is more optimistic about the second half of the year, when he believes that the U.S. economy will continue to expand and that corporate earnings will rebound.

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He told CNBC's "Street Signs Asia" last week that while the U.S. market is likely to stay volatile in the first half of this year, he expects a sustained rally in the second half. The U.S. economy grew at a faster-than-expected pace in the fourth quarter, according to data released by the Commerce Department on Thursday. Gross domestic product (GDP) expanded at an annualized rate of 2.9% in the fourth quarter, beating economists' expectations of 2.8%. This was the strongest quarterly growth rate since the first quarter of 2015.

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The growth rate was slightly slower than the 3.2% pace in the third quarter. However, the economy is still growing and creating jobs.