European equities edged lower on Friday, trimming a broadly positive week as investors digested softer global growth signals and a pared probability of another U.S. Federal Reserve rate cut this year.

At 08:10 GMT, Germany’s DAX fell 0.4%, France’s CAC 40 0.5%, and the U.K.’s FTSE 100 1.1%. Even so, all three benchmarks remain set for weekly gains, supported by improved risk appetite following the end of the U.S. government shutdown.

Fed repricing weighs on sentiment

A sharp 2.3% drop in the NASDAQ overnight filtered into Europe as traders scaled back expectations for a December Fed cut and re-examined stretched AI-exposed valuations. Recent remarks from Fed officials leaned hawkish—emphasizing limited room to ease and a preference to keep policy restrictive until inflation cools more convincingly—leaving market-implied odds of a 25 bp reduction just above 50%, down from roughly 63% a day earlier.

China slowdown rekindles demand concerns

Fresh data from China underscored a soft patch: industrial output slowed to +4.9% y/y in October and retail sales to +2.9% y/y, hinting at fragile domestic demand. With Europe heavily exposed to Chinese end-markets—industrial machinery, autos, luxury—downbeat readings added to growth anxiety. In the eurozone, third-quarter GDP due later is expected around +0.2% q/q, after +0.1% in Q2, keeping the region’s recovery tepid.

Corporate highlights

• Allianz raised full-year operating profit guidance after record Q3 and nine-month results.
• Swiss Re reported $4bn profit for the first nine months, aided by stronger P&C underwriting and lighter cat losses.
• Richemont posted +14% constant-currency quarterly sales, while tariff uncertainty with the U.S. remains a watch item.
• Melrose Industries reported +14% revenue growth for the four months to Oct. 31, led by its Engines division.

Energy: geopolitical bid meets surplus narrative

Crude rallied after a reported Ukrainian drone strike on an oil depot at Russia’s Black Sea port of Novorossiysk, elevating supply-disruption risk. Brent Jan rose 1.5% to $63.97, WTI +1.7% to $59.67. Still, both contracts are only modestly higher on the week after OPEC signaled a slight 2026 surplus, tempering the move.

The takeaway

The near-term European equity trajectory hinges on two offsets: (1) incoming U.S. data as agencies restart releases—key for December Fed pricing—and (2) China’s policy follow-through to stabilize demand. Until then, earnings resilience offers support, but valuation sensitivity—especially in tech-adjacent names—keeps rallies vulnerable to macro surprises.