European stocks clung to modest gains Friday, on pace to log a win for the week, even as the U.S. and China kicked off a trade war by implementing promised import tariffs.
Later Friday, investors will swing attention to the U.S. monthly jobs report, while keeping an eye on developments in the U.K. as government ministers gather for critical talks on Brexit.
How markets are moving
The Stoxx Europe 600 index SXXP, +0.03% rose 0.1% to 382.05, topped by the utilities sector. But the basic materials group, and the oil and gas sector, were losing ground. The pan-European index on Thursday rose 0.4%, for a third consecutive session of gains.
For the week, the Stoxx 600 was on course to rise by 0.6%, which would be the first advance after two weeks of losses.
Germany’s DAX 30 index DAX, +0.07% briefly slipped into the red before edging up by 0.1% at 12,470.29. In Paris, the CAC 40 index PX1, +0.07% picked up 0.2% to 5,378.23, and in London, the FTSE 100 index UKX, -0.09% turned down nearly 4 points to 7,598.92.
The euro EURUSD, +0.1539% traded at $1.1704, up from $1.1693 late Thursday in New York.
What’s driving the market
The U.S. implemented tariffs on $34 billion in Chinese imports as of 12:01 a.m. Eastern Time, seen as the start of a trade war between the world’s two biggest economies. As promised, Beijing has responded in kind, with levies on the same value of 545 U.S. goods, including agricultural products, vehicles and aquatic products.
Just ahead of the tariff action, U.S. President Donald Trump threatened to escalate the trade tensions by imposing further duties on more than $500 billion in Chinese imports — roughly the amount of total goods the U.S. imported from China last year.
See: How will investors know if there’s a full-blown trade war? Here’s what Wall Street says
Away from trade, investors will be watching for an update on the U.S. labor market in the Labor Department’s June nonfarm payrolls report, scheduled for release at 1:30 p.m. London time, or 8:30 a.m. Eastern Time.
Check out: How low can U.S. unemployment go? What to watch in the June jobs report
What strategists are saying
“Markets have been building up for [Friday’s] confirmation of the implementation of initial trade tariffs over recent days, and the impact on sentiment appears to have been minimal and priced in,” said Richard Perry, market analyst at Hantec Markets, in a note.
“There is no safe haven bias to market flows, with the yen weaker, Treasury yields higher, the dollar slipping a touch and equity markets supported. With the moves telegraphed, traders are already positioned. Previously, it has been the surprise announcements that has caused the market fear to be elevated,” he said.
Deutsche Bank AG shares DBK, +4.13% were up 3.7% after German weekly Wirtschaftswoche reported that J.P. Morgan Chase & Co. JPM, +0.65% and Industrial and Commercial Bank of China Ltd., or ICBC, are considering buying a stake in Germany’s largest lender.
Inmarsat PLC ISAT, -6.16% sank 9% after the British satellite-communications company rejected an improved buyout offer from EchoStar Corp. SATS, +0.87% , which is now courting the company’s board. The higher bid valued Inmarsat at 2.45 billion pounds ($3.24 billion).
Thyssenkrupp AG TKA, -0.94% rose 2.6% after Chief Executive Heinrich Hiesinger late Thursday submitted his resignation, spurring hopes for a change in direction at the company. The move comes less than a week after the German industrial group reached a deal to merge its European steel operations with Tata Steel Ltd. 500470, -3.17% .
Assa Abloy AB ASSAB, -6.64% sank 7% after Swedish lock maker warned of one-off costs in its second-quarter results.
Share of auto makers mostly fell as the U.S. and China tariff measures came in, as the Stoxx Europe 600 Autos and Parts Index SXAP, -0.64% dropped 0.4%
Shares of Volkswagen AG VOW3, -1.97% lost 1.2%, BMW AG BMW, -0.28% was fractionally lower, Peugeot UG, -1.21% gave up 1.1%, Renault AG RNO, -1.19% shed 0.5% and Fiat Chrysler Automobiles NV shares FCA, -1.82% declined 1.2%. On the other side, Daimler DAI, -0.02% was up 0.2%,
Airbus SE AIR, +0.98% were up 1.2% after the aerospace industry heavyweight said it will meet its full-year delivery targets, despite some lag during the first half of the year. At the same time, Airbus Chief Executive Tom Enders told reporters Friday that the British government has “no clue” how to pull off Britain’s exit from the European Union without harming businesses.
The business leader’s criticism comes as U.K. Prime Minister Theresa May and her cabinet ministers meet at Chequers, May’s official country house retreat, to discuss Brexit strategy, as European Union leaders’ patience runs short.