Europe markets open to close ahead of Spanish election, earnings

Geoffrey Yu, senior EMEA market strategist at BNY Mellon, assesses the outlook for the U.K. economy, saying wages are unlikely to keep up with rising costs.

Shares of Swedish steelmaker SSAB plunged more than 14% by early afternoon after the company posted a larger-than-expected fall in second-quarter earnings and warned of a deeper downturn in European demand in the third quarter.

At the top of the Stoxx 600, Finnish ship technology and power plant manufacturer Wartsila was up more than 8%, slightly paring opening gains after a stronger-than-expected second-quarter earnings report.

— Elliot Smith

The pan-European Stoxx 600 was little changed at the open. Tech stocks shed 1.6% to continue the previous session’s slide, while insurance stocks added 0.8%.

Britain’s FTSE 100 is seen around 7 points higher at 7,653, Germany’s DAX is set to decline by around 66 points to 16,138 and France’s CAC 40 is set to add around 7 points to open at 7,392, according to IG data.

U.K. retail sales rose by 0.7% month on month in June after a boost from unusually warm weather, the Office for National Statistics revealed on Friday.

Economists polled by Reuters had projected a monthly rise of just 0.2%.

“Whatever is encouraging this spending, the numbers suggest consumers remain willing to spend money when the opportunity presents itself. For the U.K. economy this is welcome, as robust domestic consumption will go a long way in helping to avoid the economy slipping into recession,” said Stuart Cole, chief macro economist at Equiti Capital.

“But today’s numbers will likely have been read with some concern inside the Bank of England, as they suggest more work needs to be done in its efforts to dull demand in order to tame inflation, despite the softer CPI figures seen this week.”

— Elliot Smith

Taiwan Semiconductor Manufacturing Company, the world’s largest chipmaker, fell 3.11% in morning trade on Friday after posting its first quarterly net income decline in 4 years.

On Thursday, TSMC posted a 10% decline in second quarter revenue from a year ago to NT$480.84 billion, while net income fell 23.3% from a year ago to NT$181.8 billion.

Despite exceeding market expectations, the company’s shares still fell.

The firm said that business was affected by macroeconomic conditions which decreased demand for electronics. TSMC produces chips for some of the largest names in smartphones and laptops.

One global chipmaker is set to benefit from an “outsized growth opportunity” on the back of the artificial intelligence trend, says Richard Clode, fund manager at Janus Henderson Investors.

“Ultimately, when you look out in three years time, your iPhone is going to have to have a huge amount of AI capability. Every laptop, PC, car is going to have to have AI capability and what’s going to give all of those devices AI capability — [is] having more powerful semiconductors in them,” he told CNBC’s Pro Talks on Wednesday.

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— Weizhen Tan