European Stocks Dip as UK GDP Recovers to Growth

European stock markets experienced slight declines on Friday as investors processed disappointing growth data from the U.K. and anticipated major U.S. bank earnings, along with a crucial fiscal policy update from China.

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

### British Economy Shows Modest Growth

Friday’s data indicated that the economic output in Britain increased by 0.2% in August, matching expectations after two months of stagnation. However, year-on-year growth was reported at 1.0%, falling short of the 1.4% forecast by economists.

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

Additionally, German inflation dropped to 1.8% in September, in line with earlier estimates. The upcoming meeting of the European Central Bank is expected to result in further policy easing, particularly as inflation in Germany is now below the medium-term target.

### Anticipation Surrounds Chinese Fiscal Policy

A key highlight on Friday was the announcement from China’s finance minister regarding a fiscal policy briefing set for Saturday, igniting hopes for increased fiscal stimulus to boost the struggling economy. Markets are anticipating new spending between 2 trillion to 3 trillion yuan (approximately $280-$420 billion), although there is some trepidation following a disappointing policy briefing earlier this week. As a significant export market for many major European firms, China’s economic challenges, such as weak consumer spending and a real estate crisis, are closely monitored.

### BP Reports Flat Output Expectations

Corporate news included BP, whose stock fell nearly 1% after the energy company announced expectations of “broadly flat” output in the third quarter, alongside projections of increased net debt by quarter’s end.

Most of the day’s focus will likely shift to the U.S., where major banks—JPMorgan Chase, BNY Mellon, and Wells Fargo—are set to release their quarterly earnings before the market opens. These reports typically mark the beginning of the U.S. earnings season and will serve as a barometer for a stock market that is nearing record highs amid elevated valuations.

In addition, Tesla is expected to be in the spotlight following the reveal of its long-anticipated Cybercab robotaxi, with CEO Elon Musk stating that production will commence by 2026 and the price will be below $30,000.

### Oil Prices Rise Amid Hurricane and Middle East Tensions

Oil prices gained on Friday, poised for their second weekly increase as investors assessed the impact of Hurricane Milton in the U.S. and ongoing tensions in the Middle East. By 03:10 ET, Brent crude rose 2.3% to $78.36 per barrel, while U.S. crude futures increased 2.1% to $74.81 per barrel. Both benchmarks were on track for weekly gains of approximately 1%.

Hurricane Milton caused significant damage across Florida, leaving millions without power, which could potentially reduce fuel consumption in the world’s largest oil producer. Furthermore, traders are apprehensive over the possibility of escalated conflict in the Middle East, particularly if Israel targets Iranian oil facilities.