The pan-European STOXX 600 index was flat at 578.87 points at the close, after three straight days of gains. For the week, the index was up 0.4%, building on the previous week’s rally.
Meanwhile, German stocks rallied 0.7% on Friday after Chancellor Friedrich Merz narrowly averted a government crisis by securing an absolute majority for a pensions bill in parliament.
The Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, increased 0.3% in September, in line with analyst expectations.
The data maintained expectations that the Fed will cut interest rates by 25 basis points next week, with the odds standing at 87.2%, according to the CME Group’s FedWatch tool.
“Markets got a lift today after slightly weaker-than-expected core PCE data, which reinforced expectations that the Fed will cut rates next week. Given the Fed’s role as the central bank of the world’s largest economy, such a move would have significant implications for global risk sentiment,” Fiona Cincotta, senior market analyst at City Index said.
Recent data and dovish remarks from some Fed policymakers have strengthened expectations for a rate cut next week.
AUTOS, RETAIL AND TECHNOLOGY STOCKS RISE
In STOXX 600, Europe’s autos and parts was the top-performing sector for the week, up 5.6%, primarily driven by the U.S. administration’s proposal to reverse rules on fuel economy standards finalised by the Biden government. On Friday, it was up 1.5%, outpacing its peers.
The broader retail sub-index also jumped 5% week-to-date, boosted by upbeat November sales by Zara-owner Inditex – a bellwether for global fast fashion – that offered an early read on how retailers fared during the crucial discounting season.
Technology stocks added 2.7% this week while Basic Resources surged 3.2% due to strength in metal prices. Copper jumped to a record high on Friday.
Citigroup set a 2026 target of 640 for the benchmark STOXX 600 index and upgraded the auto, industrials, chemicals, and basic resources sectors, citing fiscal tailwinds in 2026.
On the flipside, Swiss Re dropped 6.5% to the bottom of the main index, after the reinsurer announced its targets for 2026, below analysts’ expectations. The broader insurance index was down 0.66%.
Oil and gas index lagged its peers, down 1% on Friday. LNG tech provider GTT slipped 2.7% after Goldman Sachs said the company’s near-term earnings outlook was below consensus, starting with a “neutral” rating.
Big Yellow Group dropped 4.3% after terminating talks of a potential deal with Blackstone.
