European stocks mostly edged lower on Friday as investors remained cautious amid heightened geopolitical uncertainty toward the end of a volatile week.
By mid-morning trading, Germany’s DAX slipped 0.1%, while France’s CAC 40 fell 0.2%. In contrast, the U.K.’s FTSE 100 bucked the trend, rising 0.2%.
Geopolitical risks weigh on sentiment
European markets had rebounded a day earlier after U.S. President Donald Trump eased earlier threats of trade tariffs linked to a bid for control over Greenland. Despite this, the region’s main indices remain on course for weekly losses as geopolitical tensions continue to cloud the outlook.
Late Thursday, Trump warned of potential military action against Iran, saying the U.S. had deployed a naval fleet toward the Middle Eastern country. Speaking aboard Air Force One, he cautioned Tehran against killing protesters or reviving its nuclear program, reinforcing investor unease.
Geopolitical concerns were further underscored after Ukrainian President Volodymyr Zelenskyy criticized Europe’s response to global security threats during his address at the World Economic Forum in Davos. He accused European leaders of lacking unity while attempting to persuade Washington to change its stance, rather than strengthening their own defense posture.
Several European countries have also declined to participate in Trump’s proposed “Board of Peace,” intended to oversee post-war reconstruction in Gaza, amid concerns it could undermine the role of the United Nations.
UK retail sales surprise to the upside
Later in the session, investors were set to digest a series of January purchasing managers’ index (PMI) readings, as data has pointed to early signs of stabilization in the European economy.
Ahead of the releases, U.K. retail sales posted an unexpected 0.4% monthly increase in December, rebounding after declines in October and November. Economists surveyed by Reuters had forecast a 0.1% decline, making the data a notable upside surprise.
Corporate updates in focus
In corporate news, Ericsson announced plans to boost its dividend and launch a sizeable share buyback program, supported by stronger margins and a rise in net cash despite subdued conditions in the mobile networks market.
U.K. defense group Babcock International said it remains on track to meet its full-year margin target of 8%, citing continued organic revenue growth and potential upside linked to its Indonesian Arrowhead project.
Retailer Pets at Home confirmed that Sarah Pollard will join the company as chief financial officer designate in March.
Technology stocks were also under scrutiny after Intel forecast first-quarter revenue and profit below market expectations, triggering a sharp sell-off in after-hours U.S. trading. The chipmaker said it is struggling to match supply with strong demand for traditional server chips used in artificial intelligence data centers.
Oil prices head for weekly gains
Oil prices moved higher on Friday and were set for a fifth straight weekly gain after Trump’s comments on Iran raised concerns about potential supply disruptions in the Middle East.
Brent crude futures rose 0.5% to $64.39 per barrel, while U.S. West Texas Intermediate crude gained 0.6% to $59.69 per barrel. Both benchmarks are on track to post weekly gains of just under 1%.
Reports that a U.S. aircraft carrier and several destroyers are expected to arrive in the Middle East in the coming days added to market anxiety. Iran remains one of the largest producers in the Organization of Petroleum Exporting Countries and a key supplier to top crude importer China, making any escalation a significant risk to global oil supply.
