European equities slipped on Friday, cutting short an otherwise constructive week as investors grew more cautious about the global economic outlook and the declining odds of an additional U.S. Federal Reserve rate cut before year-end.

By 08:10 GMT, Germany’s DAX was down 0.4%, France’s CAC 40 lost 0.5%, and London’s FTSE 100 retreated 1.1%. Even with today’s declines, all three indices remain on track to end the week higher, helped earlier by renewed risk appetite after the U.S. government reopened.

Fed rate-cut expectations scaled back

European sentiment followed Wall Street lower after the NASDAQ Composite tumbled 2.3% overnight, particularly hurt by a pullback in high-growth tech stocks as traders trimmed expectations for Fed policy easing in December and questioned stretched AI-related valuations.

Recent hawkish remarks from several Fed officials have further clouded the prospect of a December rate cut. St. Louis Fed President Alberto Musalem warned that the central bank has limited scope to ease without overstimulating the economy, while Cleveland Fed President Beth Hammack argued that policy should stay restrictive to keep inflation heading down. Minneapolis Fed President Neel Kashkari separately told Bloomberg he opposed a cut last month and remains unsure about December.

Market pricing now assigns just over a 50% chance of a quarter-point cut at the December 10 meeting, down from 63% the day before, CME FedWatch data shows.

Chinese slowdown adds pressure

Sentiment also softened after the release of disappointing Chinese figures. Industrial production expanded only 4.9% in October from a year earlier—the slowest pace since August 2024—while retail sales grew just 2.9%, another post-August low. The numbers point to continued soft domestic demand in the world’s second-largest economy, a key market for many European exporters.

Concerns about the U.S. economy also lingered, with the government slowdown expected to dampen activity in the world’s biggest growth engine.

The eurozone’s own momentum remains lackluster: GDP data due later today are expected to show a meagre 0.2% expansion in Q3, after just 0.1% in Q2.

Allianz, Swiss Re, Richemont and Melrose report strong updates

In corporate news, Allianz (TG:ALV) raised its full-year operating profit guidance after delivering record third-quarter and nine-month results.

Swiss Re (TG:SR9) announced a $4 billion profit for the first nine months of 2025, supported by stronger underwriting in its property-and-casualty reinsurance division and reduced natural catastrophe claims.

Richemont (TG:RITN) topped expectations with quarterly sales rising 14% at constant exchange rates in July–September, even as the Swiss luxury house awaits the outcome of tariff negotiations between Switzerland and the U.S. following President Trump’s earlier announcement of steep 39% duties on Swiss imports.

Melrose Industries (LSE:MRO) said revenues increased 14% in the four months to October 31, led by robust growth in its Engines business.

Oil spikes after attack on Russian port

Oil prices jumped after a Ukrainian drone strike hit an oil depot at Russia’s Black Sea port of Novorossiysk, raising concerns about potential supply disruptions.

Brent crude climbed 1.5% to $63.97 a barrel, while U.S. WTI futures advanced 1.7% to $59.67.
Despite the rally, both benchmarks remain set for only modest weekly gains after OPEC said earlier this week that global supply is likely to slightly exceed demand in 2026, triggering a selloff.

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