European equities traded mostly lower on Friday, with investors remaining cautious as heightened geopolitical tensions continued to weigh on sentiment toward the end of a turbulent week.
By 08:10 GMT, Germany’s DAX was down 0.1% and France’s CAC 40 slipped 0.2%, while the UK’s FTSE 100 edged 0.2% higher.
Elevated political uncertainty
European stocks had rebounded on Thursday after U.S. President Donald Trump softened his stance on imposing trade tariffs tied to gaining ownership of Greenland, the autonomous Danish territory. Even so, all three major indices remained on track for weekly losses as political risks continued to overshadow markets.
Geopolitical concerns intensified after Trump raised the prospect of military action against Iran, telling reporters aboard Air Force One late Thursday that the United States had naval forces moving toward the region. “We have an armada… heading in that direction, and maybe we won’t have to use it,” Trump said. “I’d rather not see anything happen, but we’re watching them very closely,” he added, warning Tehran against killing protestors or resuming its nuclear programme.
Meanwhile, Ukrainian President Volodymyr Zelenskyy criticised Europe’s response to rising geopolitical threats during his speech at the World Economic Forum in Davos, Switzerland. He accused Europe of being “lost” while trying to persuade Trump to “change” and back the continent, rather than acting collectively to defend itself.
Tensions were further compounded by the decision of most European countries not to participate in Trump’s proposed “Board of Peace,” originally intended to oversee the demilitarisation and reconstruction of Gaza. Concerns were raised over the body’s structure and whether it could ultimately rival the United Nations.
UK retail sales surprise
Later in the session, investors were set to assess a fresh round of economic indicators, including January PMI readings for the euro area, as signs of a tentative recovery emerge.
Ahead of those releases, UK retail sales delivered an upside surprise, rising 0.4% in December from November as shoppers returned to stores after declines in October and November. Economists surveyed by Reuters had forecast a 0.1% monthly fall.
Corporate updates in focus
In European company news, Ericsson (BIT:1ERICB) announced plans for a substantial share buyback and a higher dividend, after a surge in net cash helped offset weak conditions in the mobile networks market.
UK defence group Babcock International Group (LSE:BAB) said it remains on track to achieve its full-year margin target of 8%, supported by strong organic revenue growth in the third quarter, with potential upside linked to progress on its Indonesian Arrowhead programme.
Meanwhile, Pets at Home Group Plc (LSE:PETS) confirmed that Sarah Pollard will join the company in March as chief financial officer designate.
Investor attention was also firmly on the technology sector after Intel (NASDAQ:INTC) issued weaker-than-expected first-quarter revenue and profit guidance late Thursday. The outlook triggered a sharp sell-off in extended U.S. trading, with the chipmaker citing difficulties aligning supply with surging demand for traditional server chips used in artificial intelligence data centres.
Oil prices head for weekly gains
Oil prices rose on Friday and were on course for a fifth consecutive weekly gain, driven by fears of supply disruptions following Trump’s comments on Iran.
Brent crude futures climbed 0.5% to $64.39 a barrel, while U.S. West Texas Intermediate rose 0.6% to $59.69. Both benchmarks were tracking weekly gains of just under 1%.
Reports indicated that a U.S. aircraft carrier and several destroyers were expected to arrive in the Middle East in the coming days, heightening concerns of renewed military conflict. Iran remains one of the largest oil producers within the Organization of Petroleum Exporting Countries and a key supplier to major importer China.
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