European stocks inch higher, led by Hermès, while U.S. equity futures struggle

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Hermès International shares were a standout gainer on Friday as European stocks rose modestly, while U.S. equity futures also inched higher.

The Stoxx Europe 600 index SXXP, +0.23% was up 0.3% to 413 after a 0.8% drop on Thursday. The index is flat for the week. Among regional indexes, the German DAX DAX, +0.51% rose 0.5%, the French CAC 40 PX1, +0.54% gained 0.6%, and the FTSE 100 UKX, +0.06% was flat.

U.S. stock futures YM00, +0.22% ES00, +0.33% NQ00, +0.42% were rising modestly, after a losing day on Wall Street led by a 0.7% drop for the Nasdaq Composite COMP, -0.72% that marked its longest losing streak since October, according to Dow Jones Market Data. Worries about higher borrowing costs and weak jobless claims data on Thursday contributed to those losses.

The 10-year Treasury yield TMUBMUSD10Y, 1.302% hovered at 1.29% on Friday from 1.1% just a week ago and 0.9% on Jan. 4.

Opinion: The S&P 500’s trailing 12-month return is about to soar

Oil prices CL.1, -1.59% BRN00, -1.13% were under pressure, with U.S. crude down more than 1%. The week has seen prices reach levels not seen since January 2020, but prices fell on Thursday amid speculation that major producers could discuss an increase in production when they meet early next month. As well, freezing temperatures, which knocked out power in Texas and wreaked havoc for refineries in that state and elsewhere, began to thaw.

Markit IHS purchasing managers index surveys rolled out across Europe. The flash reading of the IHS Markit eurozone composite PMI rose to a two-month high of 48.1 in February from 47.8 in January. 

Elsewhere, U.K. retail sales plunged in January, dropping 8.2% from the previous month, a much steeper decline than expected as businesses suffered from COVID-19 related lockdowns.

Shares of several companies were moving after a slew of earnings reports.

Hermès International RMS, +5.29% posted falling net profit in 2020, driven by weaker revenue. But the French luxury-goods company said revenue returned to growth in the second half of the year, and shares surged 6%.

“With a [approximate] 20% EBIT [earnings before interest and taxes] beat in 2H20, resilient cash flow and positive current trading comments (YTD trends in China in line with 4Q20), we expect further share price support,” said Thomas Chauvet, analyst at Citigroup, to clients in a note.

Shares of Renault RNO, -5.29% tumbled 4%, after the French automobile maker scrapped plans for a 2020 dividend as it posted a hefty loss and indicated more struggles ahead. “2021 is set to be difficult given the unknowns regarding the health crisis as well as electronic components supply shortages,” said Chief Executive Luca de Meo.

Allianz ALV, +1.40% reported higher fourth-quarter operating profit that beat forecasts, a gain that was driven by all business segments. The German insurer proposed a dividend at the prior-year level. Shares rose 1%.

Danone BN, +3.45% said its 2020 results were hurt by the COVID-19 pandemic, but that it expects to return to growth from the second quarter of this year. Sales for the fourth quarter were down 1.4% like-for-like, but showed a sequential improvement compared with the previous quarters. Shares of the French food company rose 1.4%.

Shares of Ireland-based lender Allied Irish Bank AIBG, +5.38% climbed 4%, as U.K. bank NatWest NWG, +1.52% NWG, -3.05% said it would pull out of Ireland after a strategic review of Ulster Bank concluded the lender won’t reach sustainable long-term returns.

NatWest said it has agreed to a memorandum of understanding with AIB for the sale of a €4 billion ($4.84 billion) portfolio of performing commercial loans, and the transfer of staff assigned to that loan book. NatWest reported a sharp fall pretax profit and swung to loss for the fourth quarter of 2020, but both results were better than the market expected.

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