European stocks advanced on Friday, supported by a strong finish on Wall Street that helped offset concerns stemming from weak U.K. economic data.
By 03:05 ET (08:05 GMT), Germany’s DAX index was up 0.5%, France’s CAC 40 gained 0.2%, and the U.K.’s FTSE 100 rose 0.4%, reflecting improved risk sentiment across global markets.
Fed rate cut lifts global market mood
Investor confidence improved earlier in the week after the U.S. Federal Reserve cut interest rates by 25 basis points and signaled the possibility of another reduction next year. Fed Chair Jerome Powell struck a noticeably less hawkish tone than markets had feared during his post-meeting remarks.
U.S. equities responded positively, with both the S&P 500 and the Dow Jones Industrial Average closing at record highs on Thursday. The Nasdaq Composite underperformed, weighed down by weakness in technology shares. These gains helped European markets follow Asia higher on Friday, as investors looked ahead to policy decisions from the European Central Bank and the Bank of England next week.
Weak UK growth contrasts with broader market gains
Data released earlier Friday showed that the U.K. economy remained in contraction in October, with gross domestic product falling 0.1% month on month. The decline matched September’s drop and came in below expectations for 0.1% growth.
Analysts said uncertainty surrounding the Autumn budget delivered by U.K. finance minister Rachel Reeves in November likely discouraged both businesses and consumers from making investment decisions. Attention now turns to the Bank of England’s final policy meeting of the year, where the central bank is widely expected to cut interest rates by 25 basis points to 3.75% as inflation pressures continue to ease.
In Germany, inflation rose to 2.6% in November, according to the federal statistics office, confirming preliminary figures. Harmonised consumer prices, which allow comparisons across the European Union, stood at 2.3% year on year in October.
The European Central Bank, meanwhile, is expected to leave interest rates unchanged next week, with euro zone inflation broadly aligned with its 2% medium-term target.
Corporate updates and oil prices
In company news, Capita reported that revenue in some divisions fell short of expectations, although the outsourcing group maintained its full-year profit guidance.
Broadcom also remained in focus after the U.S. chipmaker forecast first-quarter revenue above Wall Street estimates but warned that profit margins would come under pressure due to a higher share of artificial intelligence-related sales. The company’s growing exposure to the AI chip market has raised investor concerns about profitability and rising investment costs.
In commodities, oil prices edged higher on Friday as supply concerns grew over the possibility of the United States intercepting additional Venezuelan oil shipments. Brent crude futures rose 0.5% to $61.56 a barrel, while U.S. West Texas Intermediate gained 0.5% to $57.90 a barrel.
Despite the rebound, both benchmarks were set for weekly losses after sliding around 1.5% on Thursday. Hopes for a potential peace agreement between Russia and Ukraine have raised expectations of increased Russian oil supply returning to global markets.
