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European stocks traded choppy on Friday, weighed by a strong euro and as investors absorbed a policy shift announcement by Federal Reserve Chairman Jerome Powell. Drug stock Bayer and technology names fell.
The Stoxx Europe 600 index SXXP, -0.14% eased 0.1% to 370.26, after dropping 0.6% on Thursday. The index is looking at a 1.4% gain for the week. The German DAX DAX, -0.08% slipped 0.3%, the French CAC 40 PX1, +0.16% was flat, and the FTSE 100 index UKX, +0.36% rose 0.3%.
The euro EUR, -0.82% climbed 0.7% against the dollar, and that strength can be headwind for multinational European companies as it makes their products less competitive abroad. The buck USDJPY, -0.82% fell 0.6% against the yen, after news that Japanese Prime Minister Shinzo Abe will step down due to health reasons. The Nikkei 225 index NIK, -1.40% finished 1.4% lower.
Dollar weakness also followed a new policy shift by Fed Chairman Powell to keep interest rates lower for longer. The ICE Dollar Index DXY, -0.63% dropped 0.6% to 92.43.
Powell said the central bank may keep interest rates low to keep stimulating the coronavirus-battered economy, even if its inflation target of 2% is breached. A promise to keep borrowing rates lower can often be an excuse for investors to keep buying stocks.
The action was choppy as markets watched the news from Japan on Abe’s departure, but Dow Jones Industrial Average futures YM00, +0.53% climbed 0.5%, or 125 points, to 28,596, while S&P 500 futures ES00, +0.37% rose 0.3% and Nasdaq-100 futures NQ00, -0.03% were flat. The S&P 500 SPX, +0.16% logged a fresh record high on Thursday, while the Dow DJIA, +0.56% rose, but the Nasdaq Composite COMP, -0.34% finished lower.
Also weighing on Europe, German consumer sentiment is expected to significantly drop in September, according to market-research group GfK, which added that rising infections and fears of more coronavirus-related restrictions were “creating uncertainty.”
Among stocks, shares of Bayer BAYN, -3.90% slid 3.5%, after the German drugmaker’s $10.9 billion deal to resolve lawsuits over its Roundup weedkiller could be in trouble, according to The Wall Street Journal.
Technology stocks were also lower in Europe, following a weaker Nasdaq session. Shares of chip-equipment maker ASML Holding ASML, -0.78% fell 1.9%, semiconductor maker Infineon Technologies IFX, -0.04% dropped 1.3% and business software group SAP SAP, -1.54% fell 1.%.
Also down were shares of luxury-goods group LVMH Moet Hennessey Louis Vuitton MC, -0.39%, which fell 1.3%.
