European stocks moved lower on Friday, ending an otherwise positive week on a weak note. Markets came under pressure from global growth concerns and fading expectations of another U.S. Federal Reserve rate cut this year.
Germany’s DAX fell 0.6%, France’s CAC 40 slipped 0.8%, and the U.K.’s FTSE 100 dropped 1.1%.
Even with Friday’s declines, all three major indices remained on track for weekly gains, helped by the reopening of the U.S. government, which improved overall risk appetite.
Reduced Likelihood of a Fed Rate Cut
European sentiment followed the sharp decline on Wall Street, where the NASDAQ Composite closed 2.3% lower. Tech stocks were hit hard as investors scaled back expectations for a December rate cut by the Federal Reserve, raising fresh concerns about stretched AI-related valuations.
A series of hawkish statements from Fed officials added to the caution. St. Louis Fed President Alberto Musalem warned there was limited room for further easing without risking overly loose policy. Cleveland Fed President Beth Hammack argued that interest rates should remain restrictive to keep pressure on inflation.
Minneapolis Fed President Neel Kashkari said he opposed a rate cut last month and remains undecided for December.
According to CME’s FedWatch tool, the probability of a quarter-point cut at the December 10 meeting is now just above 50%, down from 63% the previous day.
Slowing Chinese Growth
Weak economic data from China also weighed on European markets.
China’s industrial output rose 4.9% year-on-year in October, the slowest pace since August 2024. Retail sales increased only 2.9%, marking their weakest reading since August last year. The figures highlight sluggish domestic demand in the world’s second-largest economy.
China is an important export market for many major European companies, so slowing growth added another layer of pressure.
The recent U.S. government slowdown is also expected to drag on economic activity in the world’s largest economy, further challenging global growth prospects.
Within Europe, economic performance remains soft. Data expected later in the day is set to confirm that eurozone GDP expanded just 0.2% in the third quarter, after growing only 0.1% in the second quarter.
Allianz Raises Outlook; Corporate Updates
In corporate news, Allianz raised its full-year operating profit outlook after reporting record results for both the third quarter and the first nine months of the year.
Swiss Re posted a $4 billion profit for the first nine months of 2025, supported by stronger performance in property and casualty reinsurance and fewer natural catastrophe losses.
Richemont reported a 14% rise in quarterly sales at constant exchange rates for the July–September period. The luxury group is still awaiting the outcome of U.S.-Swiss tariff negotiations after President Donald Trump announced steep 39% tariffs on Swiss imports.
Melrose Industries said revenue increased 14% in the four months to October 31, driven mainly by strong performance in its Engines division.
Crude Prices Surge
Oil prices jumped after a Ukrainian drone strike hit an oil depot in the Russian port of Novorossiysk in the Black Sea, potentially disrupting global supplies.
Brent crude futures rose 2.4% to $64.47 a barrel, while U.S. West Texas Intermediate crude gained 2.6% to $60.21 a barrel.
Despite the rally, both benchmarks remain on track for only small weekly gains after OPEC said earlier this week it expects global supply to slightly exceed demand in 2026, which triggered a sharp selloff.
