European Stocks Head for Higher Open

European stocks were in the green on Friday, with both the STOXX 50 and the STOXX 600 gaining 0.5% to reach fresh record levels. The advance tracked the upbeat sentiment across Asian markets after China's services PMI data came in above expectations, while a softer-than-expected US jobs report yesterday helped to ease concerns of an imminent rate hike by the Fed. In Europe, Spain's services PMI also surprised to the upside, pointing to solid expansion in the sector but in Italy growth in services rebounded slightly less than anticipated. Technology, industrials, automakers, and utilities led the gains. Shares of Siemens jumped 1.8% after Kepler Cheuvreux upgraded the stock to 'hold' from 'reduce'. ASML Holding (+1.9%), ABB (+1.8%), Airbus (+1.9%), and Iberdrola (+1.3%) also booked strong gains. In contrast, L'Oreal (-2%) and Kering (-1.9%) were among the worst performers. On the week, the STOXX 50 rose 2.3% and the STOXX 600 added 1.9%, the strongest weekly gain in about a month.

European equity markets were set to open higher on Friday, extending their advance to fresh record highs after weaker-than-expected US jobs data lowered expectations for a near-term Federal Reserve interest rate hike. In Europe, investors also see roughly a one-third chance of a European Central Bank rate increase in July as easing inflation suggests the eurozone is moving closer to price stability. Attention now turns to the latest PMI readings from across the region for further clues on the strength of economic activity. Sentiment was supported further after Germany’s ruling coalition reached an agreement on Thursday over broad tax, labor, and pension reforms. In premarket trading, Euro Stoxx 50 futures rose 0.5%, while Stoxx 600 futures gained 0.3%.

European stocks closed sharply higher at new records on Thursday as the outlook of an improved macroeconomic backdrop lent broad support to the European corporate sector. The Euro STOXX 50 gained 1.2% to 6,355 and the STOXX Europe 600 rose 1.4% to a record of 648. Equities across the world rose after a non-farm payrolls in the US rose only half what was expected, limiting the urgency for tighter policy by the Federal Reserve, and aiding fixed-income assets in economies with exposure to the US. This followed softer inflation in the Eurozone, which supported government bonds in the bloc. UniCredit soared 4% on the final day of its offer period for German lender Commerzbank, while Deutsche Bank added more than 5%. In the meantime, the outlook of lower rates in the US aided luxury giants traded in Paris, with Hermes and LVMH both adding more than 3%. Defense stocks also rallied across Europe, lifting Rheinmetall to close 6% higher.