European shares were mostly higher on Friday following another record close on Wall Street.

Better-than-expected U.K. retail sales data for January helped boost the FTSE 100.

"Looking ahead, the near-term outlook for growth in real household disposable income looks bright, suggesting retail sales will trend higher over the coming months," Pantheon Macroeconomics said.

Stocks to Watch

Maersk will likely face falling freight rates as the industry adjusts to the new norm of sailing around the Cape of Good Hope to avoid the Red Sea, Deutsche Bank said, which has lowered its target price on the stock to DKK8,577 from DKK8,655 and retained its sell rating.

"We think there is enough capacity in the container shipping industry to cope with the logistical challenges in the Red Sea, which are preventing most ships passing through the Suez Canal."

U.K. motor insurance companies' margins could expand in 2024 as premiums start to earn through but the sector faces mixed signaling in terms of regulatory warnings, slowing down its recovery, RBC Capital Markets said.

RBC starts coverage of Sabre Insurance stock with an outperform rating on its low reliance on ancillary income and Admiral at sector perform given its ancillary exposure and its premium valuation against history though it flags its impressive track record.

It might take time for peer Direct Line, which is also exposed to ancillary income and deteriorating home margins, to rebuild credibility, RBC added.

Economic Insight

The European Central Bank shouldn't wait too long to start cutting interest rates, governing council member Francois Villeroy de Galhau said.

The central bank has to chart a careful course between two hazards, Villeroy added.

it mustn't cut rates too quickly, and risk seeing inflation surge again, but it equally mustn't hold off too long and squeeze the economy too hard.

"That second risk is now just as present as the first."

He also said there are no obvious obstacles in the path to gentler price rises in the eurozone.

Inflation has eased considerably over the past year in the bloc, and the trajectory should continue, Villeroy said.

U.S. Markets:

S&P 500 futures were a little higher with PPI inflation data for January in focus.

"The release of inflation data out of the U.S. earlier in the week provided an uphill battle for those hoping to see the S&P 500 clock in a sixth consecutive weekly gain," Scope Markets said.

"However, we are once again seeing investors buy the dip, with U.S. indices looking primed for a positive end to the week."


Danske Bank Research said it remains inclined toward selling EUR/USD on rallies, adding the market seems volatile and scrutinizes every data point to assess when to expect the first Federal Reserve rate cut.

It added that U.S. PPI data at 1330 GMT features among Friday's potential forex movers.

"If PPI data mirrors earlier CPI results, indicating a halt in disinflationary progress, the USD may rebound."


10-year Bund yields are likely to stay mostly above 2% in the coming quarters after eurozone government bond yields rebounded to align with delayed rate cut expectations, SEB Research said.

Since end-December, markets have now shaved off more than 50 basis points of 2024 rate cut expectations by the European Central Bank, SEB said. Markets now expect around 108bps cuts this year, according to Refinitiv.

"We think the correction may be over now and reiterate our view that long euro rates will be volatile without any clear trend in the coming quarters with 2% as a likely bottom for the German 10-year yield," SEB said.

Societe Generale Research said Eurozone country spreads continue to tighten "slowly but surely," and if government bond supply absorption remains good and risk assets continue to perform, spreads could tighten further.

It sees room for another 5-10 basis point narrowing in peripheral spreads and 3-6bps tightening in semicore bonds, before remaining around current levels for some time.

Its central scenario sees some widening from June or after summer, "should the market come to anticipate that the rate-cut cycle will be less aggressive than previously thought."

SocGen doesn't currently expect a strong widening of spreads in the second half of the year, but rather a return to end-2023 levels.


Oil futures inched lower as fears of disruptions to supply chains and hopes for early rate cuts continued to support prices, but the IEA's demand forecast and a recent surge in U.S. stockpiles weighed on sentiment.

"Oil has come under some pressure over recent months, as market fundamentals have been generally looser than expected, while the macroeconomic outlook has grown more challenging," BMI said.

Shell's LNG portfolio has been somewhat unreliable in recent years, RBC Capital Markets said. However, if utilization rates move up for Prelude, Nigeria and Trinidad, in addition to the start-up of LNG Canada in late 2024, the energy giant's liquefaction volumes could potentially rise by 2.3 million metric tons this year, or 8%.


Gold edged up while copper made solid gains as mixed U.S. economic data this week have offered some hopes of early Fed rate cuts.


NatWest Expects Income to Slip After 4Q Beat

NatWest guided for income to decline this year after posting fourth-quarter profit that beat expectations.

The British bank expects to make between 13.0 billion and 13.5 billion pounds ($16.38 billion-$17.01 billion) in total income excluding notable items for 2024, as the benefit from higher interest rates-which boosted its top line in 2023 to GBP14.75 billion-taper off given the expected cuts later in the year.

Eni Earnings Fall on Lower Energy Prices

Eni's net profit and operating profit fell in the fourth quarter, dragged by lower oil and natural-gas prices.

The Italian oil-and-gas company said Friday that its net profit fell to 149 million euros ($160.5 million) from EUR627 million in the fourth quarter of 2022. Adjusted net profit slumped to EUR1.64 billion from EUR2.49 billion while adjusted operating profit fell 23% to EUR2.77 billion, Eni said. Adjusted operating profit before taxes totaled EUR3.17 billion, down 27%.

Swiss Re Net Profit Surged on Property-and-Casualty Strength

Swiss Re reported a sharply higher net profit for last year thanks to an improved performance in its property-and-casualty reinsurance segment, where large natural-catastrophe claims were below budget.

The Zurich-based reinsurer said Friday that it made a net profit of $3.21 billion compared with $472 million in 2022. It targeted a profit of more than $3 billion in 2023, while analysts polled by FactSet had forecast $3.27 billion.

France's EDF Swings to Profit After Nationalization

Electricite de France returned to profitability in 2023 after the French government completed the nationalization of the group, in a year marked by higher nuclear power output in the country.

The French state-owned utility on Friday posted a net profit of 10.02 billion euros ($10.79 billion) for last year compared with a EUR17.94 billion loss in 2022, when EDF grappled with a decline in nuclear and electricity output and regulatory measures that France put in place to shield consumers from price increases after Russia's invasion of Ukraine.

Umicore Stock Slumps After Earnings Miss Expectations

Umicore shares traded lower Friday following lower-than-expected earnings and guidance.

At 0828 GMT, shares in the Belgium metals and battery firm were down 2.8% to EUR20.38, after reaching a low of EUR19.76 earlier in the session.


America's Economy Slowed-It Probably Won't Stumble

The U.S. economy took a breather in January following brisk growth at the end of last year, but it remains fundamentally healthy.

Retail sales fell 0.8% in January from December, the Commerce Department said Thursday-much worse than expectations for a 0.3% decline. Also Thursday, Federal Reserve data showed January industrial production edging down 0.1% compared with expectations for a 0.2% increase.

Why U.S. Stocks Are Still the World's Best Bet

There's no place like home, and that's true whether you're Dorothy Gale or a U.S. investor.

At this point, no one needs a reminder of how well U.S. stocks have performed. The S&P 500 index has returned 28% over the past year, versus the pan-European Stoxx Europe 600's 8% gain and the Canadian S&P/TSX Composite's 6% return. The U.K.'s FTSE 100 is down 1%, and China's Shanghai Composite has lost 10%.

Investors will have to wait awhile for interest-rate cuts, Fed's Bostic says

Investors will have to wait until at least July for those widely expected interest-rate cuts, according to one Federal Reserve president's outlook.

Atlanta Fed President Raphael Bostic said rate cuts probably wouldn't be suitable until the third quarter given the current strength of the economy.

Iran's Rise as Global Arms Supplier Vexes U.S. and Its Allies

Iran's arms industry is growing rapidly, turning the country into a large-scale exporter of low-cost, high-tech weapons whose clients are vexing the U.S. and its partners in the Middle East, Ukraine and beyond.

The transformation of the industry, accelerated by Russia's 2022 purchase of thousands of drones that altered the battlefield in Ukraine, has helped Tehran scale up its support of militia allies in Middle East conflicts that have intensified alongside Israel's war with Hamas in Gaza.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

02-16-24 0517ET