European Markets Bounce Back on Oil Price Drop Despite Rising Interest Rates

European stock markets ended the week on a positive note as oil prices took a hit. The main indices in Frankfurt, London, and Paris rose, with Frankfurt leading the way at 0.7 percent. The gains came despite growing concerns about government debt levels and rising interest rates due to inflation caused by high energy costs.

Central banks' interest rate hikes are on the rise again as governments struggle to pay for borrowing. Bank of England governor Andrew Bailey hinted that the BoE could follow suit, mirroring moves from the European Central Bank and US Federal Reserve.

The sentiment shift was also attributed to a seemingly amicable meeting between US President Donald Trump and Chinese counterpart Xi Jinping, who extended their trade truce by two months until January. However, MUFG market strategist Lloyd Chan noted that 'US-China trade risks remain,' with unresolved issues over tariffs, agricultural purchases, rare earths, and technology restrictions.

On the corporate front, shares in Meta rebounded to their summer 2025 highs after investor excitement about Muse, its AI agent which presents an opportunity for revenue beyond advertising. The stock gained 4.5 percent on Thursday and has recovered from a late-March low around $525 per share.