European equity markets moved little on Friday, pausing after a volatile week dominated by major economic releases and central bank decisions, though benchmarks remained on track to end the week with solid gains.
At around 08:05 GMT, Germany’s DAX was up 0.1%, while France’s CAC 40 and the UK’s FTSE 100 were both down about 0.1%. Over the full week, the DAX was heading for a gain of roughly 0.2%, with the CAC 40 and FTSE 100 each poised to rise by more than 1%.
A breather after intense central bank activity
Market activity appeared subdued as investors digested the outcome of a packed week of policy meetings and data releases. The European Central Bank left its key interest rate unchanged at 2%, in line with expectations, but revised its economic projections higher. The ECB now forecasts eurozone growth of up to 1.4% in 2025 and 1.2% in 2026.
“The economy has been resilient. It grew by 0.3% in the third quarter, mainly reflecting stronger consumption and investment,” said ECB President Christine Lagarde at Thursday’s press conference.
Despite the improved outlook at the regional level, sentiment among German consumers weakened sharply. Data released earlier on Friday showed the consumer sentiment index compiled by GfK and the Nuremberg Institute for Market Decisions falling to -26.9 points in January, from a slightly revised -23.4 previously.
In the UK, the Bank of England delivered an expected interest rate cut on Thursday, but uncertainty remains about its next steps. Several policymakers voiced concerns over stubbornly high wage growth expectations and structural inflation pressures, even as recent data showing a decline in November retail sales pointed to fragile consumer confidence.
Central banks in Sweden and Norway also met during the week, with both opting to keep interest rates unchanged, as markets had anticipated.
EU agrees fresh funding for Ukraine
Investors were also absorbing news that European Union leaders have approved a €90 billion ($105 billion) support package for Ukraine over the next two years. The funding will be raised through joint borrowing backed by the EU budget, rather than by tapping frozen Russian assets.
EU governments had previously debated whether to use around €210 billion of frozen Russian assets, largely held in Belgium, to finance a reparations-style loan for Ukraine, but ultimately opted for common borrowing instead.
Corporate updates weigh on select stocks
On the company front, travel retailer WH Smith (LSE:SMWH) reported lower full-year earnings and reduced its headline profit outlook for the coming year, after weaker trading profits offset revenue growth.
In other news, cosmetics group Coty (NYSE:COTY) sold its remaining 25.8% stake in haircare brand Wella to KKR for $750 million, while retaining rights to a portion of any future sale or IPO proceeds.
Shares in German sportswear groups Adidas (TG:ADS) and Puma (TGR:PUMG) fell after US rival Nike (NYSE:NKE) posted disappointing sales in China, marking a second consecutive quarterly decline in gross margins.
Oil prices head for weekly decline
Oil markets were also under pressure, with prices set for a second consecutive weekly loss. Concerns about a global supply surplus and growing optimism around a potential Russia-Ukraine peace agreement outweighed worries over supply disruptions linked to a US-announced blockade targeting Venezuelan oil shipments.
Brent crude slipped 0.3% to $59.64 per barrel, while US West Texas Intermediate fell 0.3% to $55.84. Both contracts were down more than 2% for the week.
Earlier in the week, Trump announced a blockade aimed at tankers transporting Venezuelan oil already subject to US sanctions, though questions remain over how such measures would be enforced. He also said on Thursday that talks aimed at ending the war in Ukraine are “getting close to something” ahead of planned US discussions with Russian officials this weekend.
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