European Markets Show Mixed Performance Amid Political Uncertainty in France

European markets mostly rose on Friday as investors assessed the ongoing political instability in France ahead of crucial US jobs data release.

At 07:00 ET (12:00 GMT), Germany's DAX rose 0.2%, France's CAC 40 gained 1.3%, while the UK's FTSE 100 dropped 0.1%.

French Political Turmoil

French Prime Minister Michel Barnier’s minority government was toppled on Wednesday evening following a no-confidence motion supported by lawmakers from various parties. This action came after Barnier's controversial decision to push his budget through parliament without a vote.

In response, President Emmanuel Macron addressed the nation, accusing politicians of neglecting voter interests. Despite the political upheaval, Macron pledged to complete his presidential term, which continues until 2027. Barnier has resigned but will serve in a caretaker role while Macron selects a successor.

Analysts at ING noted that the OAT-BUND sovereign spread had narrowed back to levels seen weeks prior, indicating that French political risk had not heavily impacted the euro or French equities. They noted that Marine Le Pen's decision not to push for Macron's ousting would not likely lead to a significant EUR/USD rally, although political uncertainty remains unwelcome and growth in France may disappoint.

Eurozone Q3 GDP Edges Higher

Data released showed that German industrial production unexpectedly fell by 1.0% in October from the previous month, following a revised decline of 2.0% in September. However, the eurozone overall showed a quarterly growth of 0.4% in Q3, with an annual gain of 0.9%.

This modest growth raises expectations for a potential rate cut from the European Central Bank next week, with markets pricing in more than 150 basis points of easing by the end of 2025. Attention remains on the upcoming US nonfarm payrolls report for November, anticipated later in the session, which could provide insights into the Federal Reserve's future policy decisions.

Aviva to Buy Direct Line

In corporate news, Aviva (LON:AV) saw a 0.4% drop in its stock, while its rival Direct Line (LON:DLGD) surged 7% as the companies approach a preliminary agreement following an increased bid.

Direct Line’s board has indicated it would recommend the deal to shareholders if Aviva submits a formal offer valuing Direct Line at 275 pence per share — a 73% premium compared to its closing price on Nov. 27.

Oil Prices Edge Lower

Oil prices fell on Friday after OPEC+ announced an extension of its current supply cuts through 2025, amplifying concerns over weakening global demand. At 07:00 ET, U.S. crude futures (WTI) slipped 1% to $67.62 per barrel, while Brent crude fell 1% to $71.38 per barrel.

OPEC+ delayed the start of its planned oil output increases to April and extended the unwinding of cuts until the end of 2026, responding to a slowdown in global demand, especially from China.

(Nayamya Acharya contributed to this article.)