Summary
European stocks moved in mixed fashion on Friday as investors absorbed fresh quarterly results and the fallout from a sharp decline in U.S. technology shares overnight. With regional growth data due later and U.S. inflation figures on the calendar, markets displayed caution. Oil prices steadied but were positioned for a weekly drop amid forecasts of a significant 2026 supply surplus.
Market movements
At 03:05 ET (08:05 GMT) trading showed modest divergences across major European benchmarks. Germany's DAX rose 0.2%, the U.K.'s FTSE 100 added 0.4% and France's CAC 40 slipped 0.3%.
The mixed pattern reflected two competing forces: renewed risk aversion after a tech-led selloff in the United States and a stream of corporate results that offered pockets of reassurance about profits and forward plans.
Wall Street selloff and global sentiment
Global risk appetite suffered after a steep decline in U.S. technology shares overnight. The NASDAQ Composite fell by over 2% as investors reassessed high valuations tied to artificial intelligence, and that weakness carried into markets across Asia and Europe. The pullback followed an earlier rally this week driven by strong AI optimism and solid corporate earnings, leaving Europe's main indices still on track for modest weekly advances in the range of 0.3% to 0.8%.
Corporate results shaping the tone
Friday marked the close of a busy week for quarterly earnings, with a number of sizable European companies posting results or updating expectations.
- NatWest Group reported a 24% jump in its annual profit, slightly ahead of forecasts, and outlined more ambitious performance targets as it expands in Britain’s wealth management market.
- Norsk Hydro delivered fourth-quarter earnings above expectations, where stronger aluminum prices helped offset weakness in its downstream operations.
- Capgemini said full-year revenue exceeded its own target, led by accelerating fourth-quarter growth and contributions from its recently acquired WNS unit, which helped drive demand for AI-powered business process services.
- Safran forecast higher revenue and earnings for 2026 after increasing profitability last year, supported by robust aftermarket demand for its civil jet engines.
These corporate updates provided support for specific sectors — notably financials, industrials and aerospace — even as broader market sentiment was checked by the tech pullback.
Macro data in focus
Investors awaited the flash estimate for eurozone GDP growth in the fourth quarter. Consensus expectations were for 0.3% growth on the quarter, translating into annual growth of 1.3%. Earlier data on Friday showed German wholesale prices rose 1.2% in January compared with the same month a year earlier.
Also on the schedule was U.S. inflation data later in the day. Forecasts centered on a 0.3% monthly increase in the core measure for January, a pace that would see the annual rate ease to 2.5% from 2.7%. A stronger-than-expected print could undermine bets on a June rate cut and would likely weigh on U.S. equities.
Policy and political developments
On trade policy, a Financial Times report noted that U.S. President Donald Trump plans to roll back certain tariffs on steel and aluminum goods as his administration confronts mounting cost-of-living pressures. A New York Federal Reserve study released this week indicated that U.S. businesses and consumers bore nearly 90% of the cost of those tariffs in 2025.
Energy and oil markets
Oil prices steadied on Friday but were set to finish the week lower. Brent futures edged up 0.1% to $67.53 a barrel, while U.S. West Texas Intermediate fell 0.1% to $62.83 a barrel. Both contracts had slipped nearly 3% in the previous session and were on track for roughly 1% weekly declines.
The International Energy Agency said in its monthly oil market report that the global market could face a supply surplus of just over 3.7 million barrels per day in 2026. The agency also noted that global oil stockpiles expanded last year, building at one of the fastest rates since the pandemic, reinforcing the view that ample supply buffers remain.
Geopolitical risk perceptions eased somewhat after remarks by Donald Trump that negotiations on a possible nuclear deal with Iran could last as long as a month. The prospect of protracted talks diminished immediate worries about supply disruptions in the Middle East and removed some of the geopolitical premium that had supported prices earlier.
Outlook
In the short term, market direction will likely hinge on the incoming eurozone GDP flash estimate and U.S. inflation data, plus any follow-through from earnings updates. The interplay between lingering concerns about inflated AI-related valuations and pockets of corporate resilience has produced a market environment where sector-specific fundamentals matter more than broad sentiment.
For energy markets specifically, the large projected surplus for 2026 and recent stockpile builds present a structural headwind, while geopolitical developments will continue to influence near-term risk premia.
Key points
- European indices were mixed with the DAX +0.2%, FTSE 100 +0.4% and CAC 40 -0.3% at 03:05 ET (08:05 GMT).
- U.S. tech weakness - the NASDAQ fell over 2% overnight - has dented global sentiment, though European benchmarks remained on track for modest weekly gains of 0.3% to 0.8%.
- Energy markets are reacting to an IEA forecast of a 2026 oil surplus of just over 3.7 million barrels per day and fast stockpile builds, leaving crude set for a weekly decline.
Risks and uncertainties
- U.S. inflation: A hotter-than-expected core inflation print for January could derail market expectations for a June rate cut and weigh on equities.
- Valuation risk in AI-related technology stocks: Renewed reassessment of lofty AI-linked valuations has already sparked a sharp selloff and could continue to pressure risk assets.
- Oil market volatility from geopolitics: While near-term tensions eased after comments on Iran negotiations, further geopolitical developments could reintroduce a risk premium for oil.
These risks have implications for financials, technology, industrials and energy sectors depending on how macro prints and geopolitical developments evolve.