Europe close: Investors cheer US bank earnings

European stocks rose on Friday as investors cheered the release of US bank earnings.

The benchmark Stoxx Europe 600 added 0.95%, Germany’s DAX was up 0.94%, France’s CAC 40 was 1.20% higher and the FTSE Mibtel jumped 1.87%.

Meanwhile, oil prices were weaker amid doubts that planned production cuts will do enough to curb the supply glut, with Brent crude down 0.65% to $55.65.

Craig Erlam, senior market analyst at Oanda, said: “Earnings season has possibly come just at the right time as the Trump trade appears to have been exhausted in the absence of any details on his stimulus plans.

“The Dow has come extremely close to breaking above 20,000 on a number of occasions but it would appear just the idea of ambitious spending and tax cutting plans is not quite enough to take us to the next level. Perfect time then for earnings season, an opportunity for corporates to convince us that these levels are built on strong foundations, not just the prospect of fiscal stimulus.”

Bank of America’s fourth-quarter earnings exceeded expectations on Friday thanks in part to a solid performance in the bond trading divison, although revenue fell a little short. Net income in the final quarter rose 43% from the same period a year ago to $4.7bn, with earnings per share up 38% to 40 cents, beating expectations of 38 cents per share.

However, revenue came in at $19.99bn, up from $19.58 the year before but slightly below expectations of $20.85bn.

Similarly, in Europe stocks were also given a boost by healthy gains in the banking sector, with Deutsche Bank, Commerzbank, Societe Generale and BNP Paribas all in the black and the Stoxx Europe 600 banks index up 2.03%.

Investors were also digesting data showing Chinese trade was weaker than expected in December, leading to the first shrinkage in the full-year surplus since 2011. Asia’s largest economy saw net exports fall from $44.2bn in November to $40.8bn in December.

In US dollar terms, exports declined by 6.1% year-on-year following a drop of 1.6% in the month before (consensus: -4.0%), with November’s print having been revised lower from an initial reading of +0.1%.

Imports on the other hand rose by 3.1%, which while also down from the 4.7% clip recorded in November nevertheless came in ahead of analysts´ forecasts.

In corporate news, French media company Technicolor slumped on the back of a profit warning, while London-listed pub group Mitchells & Butlers rallied on a well-received trading update, as it reported a “particularly strong” Christmas period.

Italian car maker Fiat Chrysler bounced back even as the UK department for Transport launched a probe into its emissions software after accusations it may be allowing excess diesel emissions.

French autoparts maker Valeo advanced as it announced it is raising its stake in Japan’s Ichikoh Industries in order to expand its car-lights business into Japan and Asia.