European Markets Up for the Week as Investors Analyze Economic Figures

European stocks were mixed on Friday as traders assessed a flurry of US economic data before the Christmas holiday. The region's benchmark index posted its first weekly gain in three.

European stocks were mostly higher on Friday, with the Stoxx Europe 600 adding less than 0.1% by the close in London. The index extended its weekly advance to 0.6% after data showed a key gauge of US inflation continued to moderate last month while spending stagnated, suggesting the Federal Reserve’s interest-rate hikes are helping to cool price pressures and consumer demand. The UK FTSE 100 closed 0.1% higher in a shortened session amid below-average volumes. European and UK stocks trading will be closed on Monday.

Among sectors, miners, chemicals and real estate shares rallied, while consumer products and tech stocks lagged. Among individual movers, GAM Holding AG’s shares closed 8% higher after Sky News reported that the Swiss asset management firm hired UBS Group AG to explore strategic options including a sale.

European stocks rebounded this week after falling sharply the week before on fears of the impact of interest rate hikes on the economy. Although stocks lost ground in December, the Stoxx 600 is still on track for its best quarter since the end of 2020. The benchmark index is now trading at around 12 times forward earnings, below the average of 14.5 over the past decade.

According to Gunther Westen, global head of asset allocation at Oddo BHF Asset Management GmbH, the euro zone is showing signs of improvement with falling energy prices and some rebound in leading indicators. Westen told Bloomberg Television that he sees opportunities for European equities next year and that's why the firm has turned neutral and a little bit more constructive.

The Stoxx 600 is down 12% this year, which is the biggest annual decline since 2018. This is due to concerns that rate hikes will drive the region into a recession, and that the energy crisis caused by the war in Ukraine will further hurt corporate earnings and consumers’ spending power.

In 2022, UK stocks experienced record annual outflows, according to data from EPFR Global. This marked the seventh consecutive year that investors have fled the country's markets. With redemptions for 45 straight weeks, European funds are on course for their worst year ever, aside from 2016.

There are a few sectors that are currently in focus. These include healthcare, technology, and retail. Each of these sectors has unique challenges and opportunities. Healthcare is facing a number of challenges, including the rising cost of care and the aging population. Technology is rapidly changing and evolving, making it a sector with great potential. Retail is also facing a number of challenges, including the rise of online shopping and the changing preferences of consumers.

For more information on equity markets, check out the following resources:

If you want more news on this market, you can click here for a curated First Word channel of actionable news from Bloomberg and select sources. You can customize it to your preferences by clicking into Actions on the toolbar or hitting the HELP key for assistance.