European stock markets weakened in Friday’s (Nov 13) trading session, halting a four-day rally that had previously pushed indices to record highs. The STOXX 600 index fell 0.2%, while Germany’s DAX declined 0.3%, France’s CAC 40 dropped 0.2%, and London’s FTSE 100 remained flat.
The correction occurred as investors began to reassess their expectations regarding the Federal Reserve’s interest rate policy. Following U.S. inflation data for October that came in higher than anticipated—coupled with hawkish remarks from several Fed officials—the market is now fully pricing in a 25-basis-point interest rate hike in December.
Nevertheless, the STOXX 600 still posted a gain of approximately 2.4% for the week, marking its best weekly performance since June. European markets have remained relatively insulated from the volatility seen in global tech stocks, owing to lower exposure to large-cap technology companies.
Shares of Nvidia and the broader global AI sector have been a primary focus for the market, with a leadership change at the company fueling volatility. Meanwhile, a solid third-quarter earnings season and a decline in global oil prices have provided some support for European equities.
Market sentiment has also been influenced by geopolitical developments in the Middle East, following U.S. President Donald Trump’s statement that Washington no longer requires a deal with Iran. Uncertainty surrounding the Strait of Hormuz and ongoing regional conflicts remain factors that investors are taking into account.
Looking ahead, attention turns to third-quarter GDP data for the Eurozone—projected to show 0.4% growth—as well as upcoming commentary from European Central Bank (ECB) officials Frank Elderson and Isabel Schnabel. Markets will also closely monitor U.S. Producer Price Index (PPI) data and further statements from Federal Reserve officials to see whether expectations for more aggressive interest rate hikes will intensify.