European Stocks Rise as Markets Await Key U.S. Inflation Data

European stock markets edged higher on Friday as investors looked ahead to the delayed release of the Federal Reserve’s preferred inflation metric, a key indicator ahead of next week’s policy meeting. By early European trading, Germany’s DAX and France’s CAC 40 each gained 0.2%, while the U.K.’s FTSE 100 added 0.1%, reflecting cautious optimism across the region.

Global sentiment remains supported by firm expectations of a U.S. rate cut, even after jobless claims unexpectedly fell to a three-year low—a move economists attribute partly to the Thanksgiving holiday’s impact on reporting. Despite the mixed signals from the labor market, including a surprise drop in November payrolls from ADP, markets are focused on the pending release of the PCE deflator, an essential gauge for the Fed as it weighs inflation pressures against employment conditions. According to the CME’s FedWatch tool, traders now assign an 88% probability of a quarter-point cut at the upcoming meeting.

In Europe, German industrial orders delivered an upside surprise, rising 1.5% in October compared to expectations of a modest 0.4% increase. Still, a report from the German Economic Institute suggests the country’s broader economic recovery will remain muted through next year, with GDP projected to grow 0.1% in 2024 and 0.9% in 2025. The eurozone’s final third-quarter GDP reading, expected to confirm 1.4% annual growth, is due later Friday. Meanwhile, the European Central Bank is widely anticipated to maintain current interest rates at its final meeting of the year.

Corporate news also boosted sentiment, with Swiss Re announcing a $500 million share buyback and forecasting net profit of $4.5 billion for 2026. In commodities, oil prices held onto Thursday’s gains, supported by expectations of U.S. rate cuts and ongoing geopolitical tensions that continue to elevate the risk premium on Russian crude.