TLDR
- European stocks edged higher Friday but are on track for their worst weekly performance since April
- The ECB raised interest rates and warned of higher inflation linked to rising energy prices
- Oil held above $100 per barrel for a third straight day due to Middle East tensions
- U.S. 10-year Treasury yield hovered just below the closely watched 5% level
- Markets are watching U.S. CPI data due later Friday ahead of next week’s Fed meeting
European stocks managed small gains on Friday morning, but the week as a whole has been rough. The pan-European Stoxx 600 rose around 0.2% to 0.3%, sitting near two-month lows after heavy losses earlier in the week.
London’s FTSE 100 was up just 0.07% on Friday but is heading for a weekly decline of more than 2%. Germany’s DAX added 0.25%, and France’s CAC rose 0.43%.
The UK economy offered some brighter news. GDP grew 0.4% in July, beating forecasts. Industrial production also rose 0.2% month-on-month, and the trade deficit narrowed to £3.45 billion.
ECB Raises Rates, Warns on Inflation
The European Central Bank raised interest rates this week as expected. But its warning about higher inflation pushed bond yields up across Europe and unsettled markets.
German 10-year bond yields stayed near multi-decade highs, rising 1 basis point to 3.51% on Friday. UK 10-year yields dipped 1 basis point to 5.37%. The U.S. 10-year Treasury yield held just below 5% at 4.95%.
The ECB pointed to soaring energy prices tied to an ongoing Middle East conflict as a key driver of the inflation outlook. Oil prices have been above $100 per barrel for three straight days.
Banking stocks were among the better performers in Europe on Friday, as oil prices eased slightly from recent highs.
Markets Wait on U.S. Inflation Data
Investor attention is now on U.S. Consumer Price Index data due later Friday. The figures could shape expectations for the Federal Reserve’s next move at its policy meeting next week.
BREAKING: August PPI Inflation rises to 5.4%, above expectations of 5.3%.
Core PPI Inflation rose to 4.6%, the highest since June 2026.
July's headline and core PPI inflation numbers were also revised higher.
The odds of rate hikes are rising further on the news.
— The Kobeissi Letter (@KobeissiLetter) September 10, 2026
Higher-than-expected inflation in the U.S. could push the Fed toward another rate hike, adding more pressure to global bond markets.
In individual stocks, Italian semiconductor testing firm Technoprobe jumped 4.7%. The move came after its customer TSMC reported strong August revenue figures.
Elsewhere in Europe, Switzerland’s consumer confidence index rose to -33 in August. The Netherlands’ trade surplus widened to €10.9 billion in July. Finland’s current account swung to a €242 million deficit in July.
The broader market mood remains cautious. High bond yields and energy prices are the two main factors weighing on sentiment heading into the weekend.
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