European stock markets faced a slight downturn on Friday, even as they remained poised for a weekly gain, while the dollar held steady ahead of key U.S. inflation figures. Traders focused attention on Wall Street, which experienced gains on Thursday amid news that U.S. President Donald Trump is set to meet Chinese President Xi Jinping next week. This meeting, part of Trump’s trip to Asia, is largely viewed as an indication of a potential easing of trade tensions between the two nations, particularly as the November 1 deadline for imposing additional U.S. tariffs on Chinese imports approaches.
Initially, European markets opened the day positively, buoyed by favorable sentiment from the U.S. However, momentum waned throughout the trading session. As of 1110 GMT, the pan-European STOXX 600 index was down approximately 0.2%, but it remains on track for an overall weekly increase. London’s FTSE 100 Index showed a marginal decline of less than 0.1%. Meanwhile, the MSCI World Equity Index was flat, signaling a modest but promising weekly gain of 1.2%.
Despite the day’s dip in European equities, Wall Street futures indicated upward movement, with S&P 500 e-minis rising by 0.3% and Nasdaq e-minis up by 0.5%. U.S. stock markets have enjoyed significant gains this year, reaching record highs as investors flock to artificial intelligence sectors, hoping for continued interest rate cuts from the U.S. Federal Reserve. However, some analysts caution that signs of a potential bubble loom.
Market participants were keenly awaiting the delayed U.S. Consumer Price Index (CPI) report, set for release at 0830 ET (1230 GMT), which is anticipated to show that core inflation held steady at 3.1% for September, despite the recent government shutdown. Speculation suggests that the Federal Reserve will likely opt for a 25 basis point rate cut at its upcoming meeting.
Peter Fitzgerald, chief investment officer for macro at Aviva Investors, characterized the market environment as broadly supportive of equities, highlighting decreasing interest rates across developed markets—bar Japan—and a reduction in volatility. He noted the absence of major earnings surprises but acknowledged the unpredictability of when a bull market may end.
Adding to market complexities, Trump announced via social media that he would be halting all trade negotiations with Canada, citing a fraudulent advertisement that included negative comments about tariffs from former President Ronald Reagan.
The dollar index registered a slight increase to 99.028, while the Canadian dollar displayed minimal impact from Trump’s announcement. In Japan, the yen weakened in response to the new prime minister’s commitment to economic stimulus efforts, with the dollar-yen pair at 152.93. The euro maintained stability at $1.1612, following statistics revealing unexpectedly robust business activity in the Eurozone for October.
Bond yields in the Eurozone saw an uptick, with German Bund yields climbing to 2.612%, reflecting investor sentiment after the recent data release. In the commodities market, oil prices—having surged 5% following U.S. sanctions on major Russian oil companies—began to ease but still appeared primed for a weekly gain. Gold prices, on the other hand, fell about 1.6% to $4,058.41 per ounce, marking a potential weekly loss that would end a nine-week winning streak. Notably, gold funds experienced their largest weekly inflow on record, according to Bank of America Global Research.
In upcoming weeks, five of the “Magnificent Seven” companies central to the artificial intelligence wave, including tech giants Apple and Microsoft, are scheduled to report their earnings, generating heightened interest among investors. Additionally, chipmaker Intel’s earning figures released on Thursday exceeded analyst expectations, further fueling market discussions.
