European Stocks Lower as Chip Sell-Off Weighs

European stocks closed higher on Friday as energy prices eased off their peaks and halted the surge in long-term sovereign yields. The Euro STOXX 50 gained 0.8% to 6,323 and the STOXX Europe 600 added 0.5% to 639.1. GCC officials announced new efforts to meet with Iranian counterparts next week and discuss possibilities of corridors for tankers in the Persian Gulf. Banks and industrial surged as the pullback in energy prices and borrowing costs softened the tightening margins in their respective sectors. Santander, BBVA, and UniCredit jumped nearly 2% each, while Siemens and Safra added 2.5%. Meanwhile, Intesa Sanpaolo rose 2.6% as Rome stated it would refrain from interfering in the lender's takeover bid for Banca MPS. Tech stocks also advanced, with Infineon surging 5% Still, the STOXX 50 fell 1% and the STOXX 600 dropped 1.6% on the week on broader concerns of macro headwinds from higher energy prices and rates. The ECB hiked its rates yesterday, and markets price more tightening.

European stocks moved higher on Friday, with the STOXX 50 gaining 0.5% and the STOXX 600 rising 0.3%, following losses in the previous sessions that pushed both benchmarks to July-lows. The gains came as oil prices edged lower, although tensions in the Middle East remained elevated. Banking stocks were among the top performers, with Banco Santander rising 1.3% and BBVA gaining 1%. Industrial and aerospace stocks also advanced, led by Airbus (+1.6%), Safran (+2.0%) and Siemens (+1.1%). SAP, however, fell 1.6%. Despite Friday’s rebound, European equities posted a sharp weekly decline. The STOXX 50 fell 1.9% over the week, while the STOXX 600 dropped 2.2%, marking their biggest weekly losses since April. Rising energy costs have fueled concerns about a renewed pickup in inflation, increasing pressure on central banks to maintain a tighter monetary policy. The ECB raised borrowing costs by 25bps yesterday, as expected. Markets are now pricing in three additional rate hikes by March 2027.

European equity markets were poised for a modestly higher open on Friday following a two-session decline, as the recent surge in oil prices and global bond yields lost momentum, offering some relief to investors. Market participants also awaited a key US inflation reading that could influence expectations for a Federal Reserve rate hike next week. On Thursday, the European Central Bank delivered its widely anticipated quarter-point rate increase, while President Christine Lagarde highlighted upside risks to inflation and downside risks to economic growth. Investors will now turn to UK GDP figures and German current account data for July for further clues on the region’s economic health. No major earnings reports are scheduled. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were both up around 0.2%.