European equities inched higher on Friday, stabilizing after losses in the previous session, although investors remain cautious ahead of key U.S. inflation data and renewed uncertainty over trade tariffs from President Donald Trump.
As of 07:05 GMT, Germany’s DAX was up 0.4%, France’s CAC 40 gained 0.4%, and the U.K.’s FTSE 100 edged 0.1% higher.
U.S. Inflation Data in Focus
Markets are closely watching the upcoming release of U.S. Personal Consumption Expenditures (PCE) data, the Federal Reserve’s preferred inflation gauge, for signals on potential further interest rate cuts this year. Wall Street losses on Thursday reflected the resilience of the U.S. economy, which has raised questions about the need for additional policy easing. Fed officials have largely signalled caution on cutting rates further, noting that tariffs could increase inflationary pressures.
Trade Tariffs Add to Market Uncertainty
Late Thursday, President Trump unveiled a series of new trade tariffs, including a 100% levy on imported pharmaceutical products. The tariffs would apply to all pharma imports unless the company has already begun establishing a U.S.-based manufacturing plant. Additional duties include a 25% tariff on heavy trucks, a 50% tariff on kitchen and bathroom fittings, and a 30% tariff on upholstered furniture, all set to take effect from October 1.
It remains unclear whether these tariffs would be imposed on top of existing national duties or if countries with trade agreements, such as the European Union or the U.K., would be exempt. The U.S. imported at least $212 billion in pharmaceutical goods in 2024, highlighting the potential market impact.
Drugmakers and European Economic Data
Investors will be watching Europe’s largest pharmaceutical companies closely in response to the tariff news. On the economic front, Spain’s GDP rose 0.8% quarter-on-quarter in Q2, exceeding expectations, while Italy’s business and consumer confidence figures are due later in the session.
Oil Prices Poised for Weekly Gain
Oil prices climbed on Friday, tracking a strong weekly gain as Russian energy supply disruptions and a surprise U.S. crude inventory draw tightened market conditions. At 03:05 ET, Brent crude futures were up 0.2% at $69.54 a barrel, while West Texas Intermediate rose 0.3% to $65.17 a barrel. Both benchmarks have increased over 4% this week, marking their largest weekly gains since mid-June.
Ukrainian drone strikes on Russian energy facilities prompted Moscow to impose partial diesel export curbs and extend a gasoline export ban until the end of 2025 to protect domestic fuel supplies, reducing global availability. On the demand side, U.S. crude inventories fell more than expected, further tightening the market.
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