European equities moved higher on Friday, supported by positive momentum from global markets, even as disappointing economic data from the UK weighed on sentiment.
At around 08:05 GMT, Germany’s DAX was up 0.5%, France’s CAC 40 gained 0.2%, and London’s FTSE 100 rose 0.4%.
Fed decision lifts risk appetite
Market sentiment improved earlier in the week after the US Federal Reserve cut interest rates by 25 basis points and signalled the possibility of an additional reduction next year. Fed Chair Jerome Powell adopted a noticeably less hawkish tone than investors had anticipated during his post-meeting press conference.
US equities responded positively, with both the S&P 500 and the Dow Jones Industrial Average closing at record levels on Thursday. The NASDAQ Composite underperformed, however, as technology stocks came under pressure.
The strength in US markets helped European stocks follow Asian equities higher on Friday, as investors also looked ahead to upcoming policy decisions from the European Central Bank and the Bank of England next week.
UK growth data disappoints
Data released earlier in the session showed that the UK economy remained in contraction in October, with gross domestic product declining by 0.1% month on month. The reading matched September’s fall and undershot expectations for a 0.1% expansion.
Market participants pointed to lingering uncertainty surrounding the Autumn Budget presented by UK finance minister Rachel Reeves in November, which may have discouraged investment and spending decisions by businesses and households.
The Bank of England is scheduled to hold its final monetary policy meeting of the year next week and is widely expected to cut interest rates by 25 basis points to 3.75%, as recent figures indicate inflationary pressures are easing.
In Germany, inflation rose to 2.6% in November, according to data released by the federal statistics office, confirming preliminary estimates. Harmonised consumer prices, used for comparison across the European Union, stood at 2.3% year on year in October.
By contrast, the European Central Bank is expected to leave interest rates unchanged at its next meeting, with eurozone inflation broadly aligned with the bank’s medium-term target of 2%.
Corporate developments
In company news, Capita PLC (LSE:CPI) said in a recent trading update that revenue in some business units came in below expectations, although the outsourcing group maintained its full-year profit guidance.
Broadcom (NASDAQ:AVGO) was also in focus after forecasting first-quarter revenue above market estimates. However, the US chipmaker cautioned that margins are likely to decline due to a higher proportion of artificial intelligence-related revenue. The company’s expansion into AI chips has raised investor concerns about profitability and the cost of large-scale capital investment.
Oil prices edge higher
Oil prices rose modestly on Friday, supported by concerns over tighter supply after reports that the US may intercept additional Venezuelan oil shipments.
Brent crude futures increased by 0.5% to $61.56 a barrel, while US West Texas Intermediate crude gained 0.5% to $57.90 a barrel. Despite the day’s gains, both benchmarks remained on track for weekly declines after falling around 1.5% on Thursday, amid speculation that a potential peace agreement between Russia and Ukraine could lead to increased Russian oil supply on global markets.
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