Europe markets open up 0.6%; UK retail sales miss sends sterling lower

Business activity in France shrunk in November, according to S&P Global’s Purchasing Managers’ Index, amid a broad decline in new orders.

The composite PMI output index — which encompasses both services and manufacturing activity — fell to 44.8 in November, down from 48.1 in the previous month and below expectations of 48.3, according to a Reuters poll. The contraction was its fastest since January.

A reading below 50 indicates contraction, while one above 50 indicates expansion.

“Weaker demand was a common theme seen throughout company anecdotal responses during November – both commercial clients and households reportedly lowered their interest in French goods and services – and the latest data showed that new order volumes contracted at the steepest pace in four years,” the release from S&P Global said.

The business executives surveyed also cited negative expectations for activity over the coming year for the first time since May 2020.

— Katrina Bishop

Swedish battery maker Northvolt filed for Chapter 11 bankruptcy protection in the U.S., reflecting a major setback to Europe’s electrification ambitions.

In a statement published Thursday, Northvolt said the move will allow it to restructure its debt, scale back its business and secure a sustainable foundation for its continued operation.

A partner of major European automakers, Northvolt produces lithium-ion batteries for the blooming electric vehicle industry. In recent months, however, the company has been struggling to stay afloat while navigating a major cost-cutting drive.

Read the full story here.

— Sam Meredith

The U.K.’s FTSE 100 index was trading 0.7% higher at 8:20 a.m. London time.

Germany’s DAX was up 0.52%, France’s CAC was 0.49% higher and Italy’s FTSE MIB was up 0.51%.

All sectors were in the green, with tech stocks among the best performers, up 1.1%.

— Katrina Bishop

Capital Economics said the U.K.’s disappointing retail sales marked a “slow start to the golden quarter, but the outlook is improving.”

Ashley Webb, U.K. economist, said the decline in sales could be indicative of concerns about tax rises following Finance Minister Rachel Reeves’ tax-and-spend budget.

“But despite those tax rises, we still think a solid rise in real earnings in Q4 will support retail sales volumes in the run up to the crucial festive period,” he wrote in a note on Friday.

October’s fall in spending was relatively broad-based, he added, with clothing stores reporting the biggest slide in retail sales, down 3.1%.

Looking ahead, Ashley said he expects a “chunky” rise in real earnings in the fourth quarter to support retail sales looking ahead.

“Despite the tax rises announced in the Budget, we still expect the retail sector to contribute to above-consensus consumer spending growth of +0.8% in 2024, +1.3% in 2025 and +1.8% in 2026,” he noted.

— Katrina Bishop

The British pound fell to a six-month low against the U.S. dollar following U.K. retail sales data, but has since recouped some losses.

The country’s Office for National Statistics on Friday said that retail sales volumes lost 0.7% month-on-month in October, well below economists’ expectations of a 0.3% decline, according to a Reuters poll. It follows a rise of 0.1% in September.

Sterling fell to around $1.2555 following the data release, its lowest level since the middle of May.

By 7:38 a.m. London time, the pound had pared some losses, trading down 0.16% at $1.2566.

— Katrina Bishop

The German economy expanded by 0.1% in the third quarter on the previous three months — lower than a preliminary reading of 0.2% for the period.

“In the 2^nd quarter, economic performance dropped 0.3%, after having risen slightly (+0.2%) in the 1^st quarter. Following this generally subdued performance in the first half of 2024, the German economy begins the second half of the year with modest growth,” the country’s Federal Statistical Office said in a statement.

— Katrina Bishop

Chinese markets are “turning a corner” following a series of government stimulus measures, HSBC said, naming its top stock ideas for 2025.

“Mainland China has announced a slew of policies to help ensure that local governments can pay their bills and service debt. This should reduce the risk of an immediate slowdown in growth in mainland China and the market has so far reacted positively to these initiatives,” the investment bank’s analysts wrote in a Nov. 19 research note.

CNBC Pro subscribers can read more here.

— Amala Balakrishner

European markets are expected to open higher on Friday.

The U.K.’s FTSE 100 index is expected to open 33 points higher at 8,184, Germany’s DAX up 28 points at 19,174, France’s CAC up 5 points at 7,221 and Italy’s FTSE MIB up 52 points at 33,402, according to data from IG.

— Sam Meredith