Market Analysis

European markets decline while the UK GDP starts to grow again

Amos Simanungkalit · 11 Oct 202417.9K Views

European stock markets saw slight declines on Friday as investors assessed underwhelming growth data from the U.K. while anticipating crucial earnings reports from U.S. banks and a highly awaited fiscal policy update from China.

As of 03:10 ET (07:10 GMT), Germany's DAX index was down 0.1%, the CAC 40 in France fell by 0.1%, and the FTSE 100 in the U.K. dropped 0.4%.

British Economy Shows Modest Growth
Data released earlier on Friday revealed that the U.K.'s economic output increased by 0.2% in August, aligning with forecasts and following two months of stagnation. Year-over-year, economic output rose by 1.0%, falling short of the anticipated 1.4% growth.

Analysts at Capital Economics noted that this data supports the view that a mild slowdown in GDP growth for the latter half of the year is more likely than a full-blown recession.

German Inflation Eases Ahead of ECB Meeting
German inflation moderated to 1.8% in September, as confirmed by the federal statistics office. The European Central Bank is scheduled to meet next week and is expected to ease monetary policy further, particularly since inflation in Germany has now dipped below its medium-term target.

Attention Turns to Chinese Fiscal Policy
Investors are particularly focused on a fiscal policy briefing called by China's finance minister for Saturday, with hopes for additional stimulus to boost the world’s second-largest economy. Markets anticipate announcements of new spending between 2 trillion and 3 trillion yuan ($280-$420 billion). However, there is some trepidation following a lackluster policy briefing earlier in the week.

China’s economic struggles, characterized by weak consumer spending and a real estate crisis, pose concerns, especially for several major European companies that rely heavily on the Chinese market.

BP Stock Slips on Output Expectations
In corporate news, BP (NYSE) shares fell nearly 1% after the energy company indicated that it anticipates third-quarter output to be "broadly" flat, and net debt at the end of the quarter is expected to rise.

Most of the day's attention, however, is likely to be directed toward the U.S., where major banking institutions such as JPMorgan Chase (NYSE), BNY Mellon (NYSE), and Wells Fargo (NYSE) are set to announce their quarterly earnings before the market opens. These results typically signal the beginning of the U.S. earnings season and will serve as a barometer for a stock market that is trading near record highs and at elevated valuations.

Tesla (NASDAQ) will also attract attention after the electric vehicle manufacturer unveiled its long-anticipated Cybercab robotaxi late Thursday. CEO Elon Musk announced that production is slated to begin by 2026, with a target price of under $30,000.

Oil Prices Rise Amid Hurricane Impact
Oil prices climbed on Friday, poised for a second consecutive weekly gain as investors evaluated the impact of hurricane damage in the U.S. and ongoing tensions in the Middle East. By 03:10 ET, Brent crude was up 2.3% at $78.36 per barrel, while U.S. crude (WTI) rose 2.1% to $74.81 per barrel.

For the week, both benchmarks are on track for approximately 1% gains. Hurricane Milton caused significant destruction in Florida, leaving millions without power, which could potentially reduce fuel consumption in the U.S., the world’s largest oil producer and consumer. Additionally, traders remain cautious about the possibility of escalating conflicts in the Middle East, particularly if Israel targets Iranian oil facilities.