European Midday Briefing : Stocks Tick Higher on Positive Inflation Data

MARKET WRAPS

European stocks ticked higher on Friday, continuing to benefit from the court ruling on Trump's trade tariffs and positive inflation data.

While investors continue consider the potential consequences of the ruling, Treasury Secretary Bessent has already said it hasn't had an impact on trade negotiations.

Now, the president's team is weighing a twofold response, according to people familiar with the matter.

Closer to home, price rises in Spain and France cooled this month , putting the ECB on course to reach its inflation target.

Economic Insight

The ECB is expected to proceed cautiously, with a pause at 2% likely as inflation forecasts drift slightly lower, possibly to 1.8% by 2026, Franklin Templeton said.

While near-term growth may soften amid uncertainty, a recovery is expected from 2026, shifting the policy focus from cuts to potential hikes."

Meanwhile, rising defence spending points to a longer-term fiscal shift, echoing patterns from previous high-spending decades.

U.S Markets:

Stock futures fell with investors--weary from tariff uncertainty--awaiting the Federal Reserve's favourite inflation gauge.

Separately, data published Thursday but conducted before the ruling blocking Trump's levies, found 83% of chief executives expected a recession in the next 12 to 18 months.

Forex:

The dollar rose slightly but remained at weaker levels with the DXY dollar index trading below the key 100 level amid heightened uncertainty over U.S. tariffs.

ING said the dollar could fall if U.S. personal consumption expenditures data is weaker than expected.

Investors will also look at the PCE core price index, expected to rise just 0.1% month-on-month in April, it added.

Upcoming data is expected to show German inflation eased in May but the euro's moves are more likely to remain dictated by the dollar's performance, ING said.

The market is already fully pricing in a 25bp rate cut by the ECB on June 5.

U.S. personal consumption expenditures data "may be the biggest driver of the euro today and may keep it supported in the confines of a $1.1300-$1.1400 short-term range."

Bonds:

Treasurys have been a busy economic barometer as of late.

The net effect of all the tumult was that the average yield on the index is about 20 basis points higher than before Trump's tariff announcements on April 2, Federated Hermes said.

U.S. budget deliberations are not yet finished and the Senate could end up cutting more spending from the bill.

Treasury yields were little changed in early European trading.

However, some market watchers still see room for short-term gains for Treasurys.

Bond issuance pressure in the eurozone is set to moderate meaningfully in 2H relative to 1H, and at the margin this should support European duration, Morgan Stanley said.

Energy:

Crude oil eked out some gains on rising gasoline demand hopes, despite concerns of increased OPEC+ supply.

OPEC+ is expected to announce production hikes for July over the weekend.

The exact size of the cartel's hike will be declared at the meeting but is expected to be larger than currently scheduled, ANZ wrote.

Metals:

Gold futures slid on a stronger dollar.

The precious metal is on track for an overall weekly loss, though it remained up more than 22% in the year to date.

EMEA HEADLINES

Ray-Ban Maker EssilorLuxottica to Buy Optegra in Medical AI Push

Ray-Ban maker EssilorLuxottica said it would buy AI-focused ophthalmology platform Optegra from MidEuropa, as part of the group's medical technology strategy.

The Franco-Italian eyewear group said Friday that the deal builds on the company's offering, which spans beyond frames and lenses to include AI-powered technologies, wearables, medical instruments and science-backed eyecare solutions.

BP Appoints Former Devon Energy Chief David Hager as Nonexecutive Director

BP has appointed the former chief executive of U.S energy company Devon Energy, David Hager, as a nonexecutive director at a time when it is seeking to more than double its production of oil and gas in the U.S. by the end of the decade.

The British energy company said Friday that Hager brings a deep knowledge of the U.S. upstream oil-and-gas industry. His appointment will be effective from Monday.

Sanofi, Regeneron's Itepekimab Delivers Mixed Results in Late-Stage Trials

Sanofi and Regeneron said that drug candidate Itepekimab met the primary goal in one of two chronic obstructive pulmonary disease phase 3 studies, but didn't hit the main objective of a second trial.

The French pharmaceutical company on Friday said that Itepekimab in former smokers with inadequately controlled chronic obstructive pulmonary disease met the primary endpoint of a statistically significant reduction in moderate or severe acute exacerbations compared to placebo of 27% at week 52.

M&G and Dai-ichi Life Form Strategic Partnership

M&G said it formed a strategic partnership with Japanese insurance company Dai-ichi Life aimed at delivering at least $6 billion of new business flows for M&G over the next five years.

The London-listed investment management firm said Friday that Dai-chi Life intends to acquire about 15% of shares in M&G, which will become its preferred asset management partner in Europe.

GLOBAL NEWS

Rising Inflation, Weak Production Put Bank of Japan in Tough Spot

TOKYO-Japanese government data released Friday present a mixed picture of rising inflation and sluggish industrial activity, placing the Bank of Japan in a difficult position when it considers future rate hikes.

Consumer prices excluding fresh food in the Tokyo metropolitan area rose 3.6% in May from a year earlier, up from April's 3.4% increase, driven by continued food price gains. Tokyo CPI is viewed as an early indicator of nationwide inflation trends.

Federal Authorities Probe Effort to Impersonate White House Chief of Staff

WASHINGTON-Federal authorities are investigating a clandestine effort to impersonate White House chief of staff Susie Wiles, according to people familiar with the matter, after an unknown individual reached out to prominent Republicans and business executives pretending to be her.

In recent weeks, senators, governors, top U.S. business executives and other well-known figures have received text messages and phone calls from a person who claimed to be the chief of staff, the people familiar with the messages said.

Israel Fears Being Boxed In by Trump's Iran Talks

Seven weeks into negotiations between the U.S. and Iran, Israeli officials are concerned the Trump administration could agree to a deal that doesn't block Tehran's ability to produce a nuclear bomb but curtails the option of Israeli military action.

That puts Israel in a bind with its most important ally on its most pressing national security question: the risk of a nuclear-armed Iran. Israel's efforts to stiffen the U.S. negotiating position and preserve the option for a military strike at Iran's facilities have led to frustration at the White House.

Trump Administration Publishes List of Sanctuary Cities and Counties to Target

The Trump administration on Thursday named counties and cities in more than 30 states, including New York City, Los Angeles, Chicago and Seattle, as sanctuary jurisdictions it could go after for not complying with federal immigration laws.

President Trump has threatened to pull federal funding and pursue lawsuits against places that don't change their practices.

Tariff Ruling Is Put On Hold While Trump Administration Appeals

A federal appeals court has temporarily put on hold a ruling that voided President Trump's tariffs while it considers the administration's challenge to the lower-court decision.

In a brief order Thursday, the U.S. Court of Appeals for the Federal Circuit said it was pausing Wednesday's decision from the U.S. Court of International Trade until it can hear further legal arguments. The order, known as an administrative stay, didn't rule on the merits of the litigation. Administrative stays are common in emergency appeals.

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

(END) Dow Jones Newswires

05-30-25 0511ET