European equities moved lower on Friday, closing the week in negative territory as investors remained cautious amid persistent geopolitical uncertainty.
At 08:02 GMT, Germany’s DAX was down 0.1%, France’s CAC 40 slipped 0.2%, and the UK’s FTSE 100 eased 0.1%.
Greenland tensions raise downgrade concerns
Uncertainty around Greenland remained in focus after talks earlier in the week between senior U.S. officials and the foreign ministers of Denmark and Greenland failed to produce an agreement on the future of the Arctic territory. Danish Prime Minister Mette Frederiksen said there was still a “fundamental disagreement” with the United States after President Donald Trump reiterated that the U.S. “needs” Greenland.
Frederiksen also warned that a dispute with Washington over Greenland could threaten the future of NATO, the military alliance that includes the U.S., Denmark and most European countries.
A weakening of the alliance could have credit implications for Europe, according to Fitch. James Longsdon, head of sovereign ratings at the agency, said on Thursday that Fitch could consider a one-notch “adjustment” to European sovereign ratings if the defence alliance were to fracture.
He added that geographical exposure would be a key consideration. “It could be where you felt the vulnerability to a geopolitical event would be most obvious,” he said. “That’s the broad rule of thumb, so the further away you are from Russia, the least likely that is to be the case.”
Several European countries, including Germany, France, Norway and Sweden, have already begun deploying troops to Greenland as a signal of support.
German inflation stalls
Earlier data showed that German consumer prices were unchanged in December, with annual inflation at 1.8%, below the European Central Bank’s medium-term target of 2.0%.
The ECB has kept interest rates unchanged since concluding a rapid easing cycle in June and indicated last month that it sees no urgency to alter policy, citing resilient economic growth and easing inflation pressures. The central bank’s next policy meeting is scheduled for early February.
Chipmakers remain in focus
The European earnings calendar is relatively quiet, but semiconductor stocks are expected to stay in the spotlight following results released on Thursday by Taiwan Semiconductor Manufacturing (NYSE:TSM).
The world’s largest contract chipmaker reported strong fourth-quarter earnings and said demand linked to artificial intelligence remained robust. The update helped lift shares of European peers on Thursday, including Dutch equipment supplier ASML (EU:ASML), ASM International (EU:ASM) and BE Semiconductor (EU:BESI).
Oil steadies after sharp fall
Oil prices were slightly higher on Friday, stabilising after steep losses in the previous session as fears of an imminent U.S. strike on Iran eased, reducing perceived supply risks.
Brent crude futures rose 0.1% to $63.85 a barrel, while U.S. West Texas Intermediate crude gained 0.2% to $59.30 a barrel.
Both benchmarks dropped more than 4% on Thursday after President Trump said Tehran’s crackdown on protesters was easing, tempering concerns about potential military action that could disrupt oil supplies. Even so, crude prices are still on track to end the week broadly flat, after reaching multi-month highs earlier in the week amid unrest in Iran.
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