European stock markets fluctuate; investors digest more earnings reports and await economic growth data

Investing.com - On Friday, European stock markets showed mixed performance as investors digest more quarterly earnings reports and the overnight decline in US tech stocks, while awaiting the release of regional economic growth data.

At 03:05 AM Eastern Time (16:05 Beijing Time), Germany’s DAX index rose 0.2%, the UK’s FTSE 100 increased 0.4%, while France’s CAC 40 declined 0.3%.

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Wall Street Selloff Dampens Market Sentiment

On Friday, global market sentiment was affected by a sharp overnight selloff on Wall Street, reigniting concerns over artificial intelligence valuations and weakening risk appetite.

On Thursday, the tech-heavy NASDAQ Composite fell more than 2% as investors reassessed the high valuations of AI-related stocks, leading to significant declines in Asian markets and weakness in European markets.

Nevertheless, this correction followed a strong rebound earlier this week, driven by optimism about AI prospects and robust corporate earnings, suggesting that major European indices could still achieve a weekly gain of 0.3% to 0.8%.

NatWest Group Reports Significant Profit Growth

Friday also features more corporate earnings reports, marking the end of a week packed with financial disclosures.

NatWest Group reported a 24% increase in annual profit, slightly above expectations. The bank has set more ambitious performance targets as it expands in the UK’s costly but potentially lucrative wealth management market.

Norsk Hydro reported better-than-expected Q4 earnings, with soaring aluminum prices offsetting weakness in its downstream business.

French IT services firm Capgemini exceeded its full-year revenue targets, benefiting from accelerated growth in Q4. Its recent acquisition of WNS has boosted demand for AI-driven business process services.

Safran, the French aerospace group, forecasts revenue and profit growth in 2026, supported by strong demand in the civil jet engine aftermarket last year, which improved its profitability.

Eurozone Growth Data Coming Soon

Earlier on Friday, data showed German wholesale prices increased by 1.2% year-over-year.

However, the focus in European markets will mainly be on the quick estimate of Eurozone GDP growth for Q4, with expectations of a 0.3% quarter-on-quarter increase and a 1.3% annual growth rate.

Also worth watching is the US inflation data released later in the day. Forecasts suggest core inflation in January rose 0.3% month-over-month, enough to slow the annual rate from 2.7% to 2.5%.

If the data exceeds expectations, traders may abandon bets on rate cuts in June, which could pressure Wall Street.

On the political front, the Financial Times reported that US President Trump plans to cut some tariffs on steel and aluminum as his administration addresses the rising cost of living crisis.

A recent study from the New York Federal Reserve showed that by 2025, US businesses and consumers will bear nearly 90% of the costs of Trump’s tariffs.

Crude Oil Set for Weekly Decline

Oil prices stabilized on Friday but are expected to record a weekly decline amid forecasts of significant oversupply and rising inventories, while tensions between the US and Iran have eased.

Brent crude futures rose 0.1% to $67.53 per barrel, while US WTI crude futures fell 0.1% to $62.83 per barrel.

Both contracts fell nearly 3% in the previous trading day, putting them on track for about a 1% weekly decline.

The International Energy Agency stated in its monthly oil market report that global oversupply could exceed 3.7 million barrels per day in 2026, highlighting a significant surplus.

The agency also noted that global oil inventories expanded last year at one of the fastest rates since the pandemic, underscoring ample supply buffers.

Investors are also assessing geopolitical risks, as former President Trump indicated that negotiations for a potential nuclear deal with Iran could last up to a month.

The extension of negotiations reduces immediate concerns over supply disruptions in the Middle East and eases the geopolitical risk premium that previously supported oil prices.

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