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European stocks rise for the week with cautious optimism, inflation fears linger

European stocks rise for the week with cautious optimism, inflation fears linger

24 May 2021

European stocks rose on Friday, as Swiss luxury goods maker Richemont jumped after its results and accelerating business growth in the euro zone kept investors cautiously optimistic in the face of rising inflation worries.

The pan-European STOXX 600 index rose 0.6%, capping the week with a small gain.

Cartier-owner Richemont rose 5.0% to a record high as it proposed doubling its dividend back to pre-pandemic levels after strong demand for jewellery helped lift net profit and contain the fall in sales in its fiscal year 2020/21.

IHS Markit’s survey showed euro zone business growth accelerated at its fastest pace in over three years in May, helped by a strong resurgence in the bloc’s dominant service industry as economies reopened.

A gauge of British economic growth hit its highest level on record in May as many services firms reopened their doors and factories rode a wave of demand from a recovering global economy, prompting a jump in both hiring and prices.

“The picture today for risk assets looks a lot more positive than it did mid-week… and today’s suite of stronger economic data provides a continued argument to stick with equities,” said Chris Beauchamp, chief market analyst at IG.

“However, until we clear the peaks seen a week ago some caution will linger.”

Global equities have struggled to make headway after hitting record highs earlier this month, as investors fear that higher inflation could prompt central banks to pare back pandemic-era support more quickly than expected.

However, European Central Bank President Christine Lagarde said it is still too early for the central bank to discuss winding down its 1.85 trillion euro ($2.25 trillion) emergency bond purchase scheme, less than two weeks ahead of a crucial policy meeting.

German luxury carmaker BMW rose 0.7% after it said it would have to set aside 1 billion euros, less than initially feared, for expected European antitrust fines for alleged collusion with rivals.

The FTSE MIB climbed up by 1.10% to 24,975.05. In the cash markets, the DAX futures Germany was trading up 0.44%  to 15,437.17. CAC 40 futures in France rose by 0.68% to 6386.96 while the FTSE 100 futures in the U.K. was down by 0.02% to 7,018.12 ,at the time of writing.