European stock markets headed toward a tentative opening this Friday as a global sell-off in the technology sector raised fresh doubts about the long-term viability of massive AI investments.
These concerns regarding AI-driven disruption extended beyond tech, creating a drag on the logistics, financial, and commercial real estate sectors. Amidst this cautious atmosphere, investors turned their attention to a heavy macroeconomic calendar, which included German wholesale prices, Spanish inflation figures, and a suite of Eurozone data covering GDP, employment, and trade.
Despite the underlying tension, premarket futures for the Euro Stoxx 50 and Stoxx 600 remained relatively flat, suggesting a neutral start for the broader indices.
The session was further complicated by a wave of corporate earnings, most notably from French beauty giant L’Oreal, which saw its shares tumble approximately 6% in early trading. This decline, marking the company’s worst performance since at least October, followed fourth-quarter sales of 11.3 billion euros (roughly $13.4 billion) that narrowly missed analyst targets.
The shortfall was primarily attributed to a stagnant recovery in North Asia, the global beauty industry’s second-largest market, where growth failed to meet expectations.
Adding to the pressure, Deutsche Bank Research suggested that L’Oreal’s earnings growth is likely to decelerate in the immediate future.
On the FX front, the Japanese yen was on track for its strongest weekly performance in nearly 15 months on Friday, capping a period of steady gains.
The currency’s resurgence became the primary focal point of the foreign exchange market, defying early predictions that a landslide victory for Sanae Takaichi would trigger a deepening sell-off. Instead, the clear electoral mandate appears to have eased concerns regarding fiscal stability and political gridlock, encouraging investors to unwind “short” bets against the yen.
By Friday, the yen was trading at 153.08 per dollar, and while it dipped slightly in the final session, it remained poised for a 2.7% weekly advance, its most significant climb since November 2024.
This strength was mirrored across other major pairs, with the yen set for a 2.3% weekly jump against the euro and a 2.7% rise against the British pound.
In the broader currency market, the euro and sterling saw modest declines, with the euro trading at $1.1863 and the pound easing to $1.3613.
Meanwhile, the Australian dollar faced a 0.3% daily dip to $0.7072, though it remained on course for a weekly gain of nearly 0.9%. The Aussie’s recent resilience has been supported by a hawkish stance from the Reserve Bank of Australia, which recently implemented a rate hike to combat persistent inflation.
Overall, the US dollar index stood slightly higher at 97.01 on Friday but was still tracking toward a 0.7% loss for the week as global investors pivoted toward the rebounding yen and other high-yielding assets.
Currency Power Balance
