European stocks rise, dollar set for weekly loss after yields drop

European stocks experienced a rise on Friday as markets stabilized following a tech-driven sell-off, while the dollar was set for a weekly decline. The markets had been shaken this week by concerns over rising interest rates and debt-driven financing behind the AI boom, leading to a downturn in technology and chip stocks. Traders grew confident in additional US rate hikes after surpassing expectations of inflation data on Wednesday, prompting investors to pour money into Treasuries and other government bonds.

Asian stocks largely increased, and bond markets steadied on Friday, as traders reversed some of the previous session's declines. Despite the MSCI World Equity Index's overall weekly loss, European stock indexes recovered, with the STOXX 600 up 0.6%, Germany's DAX up 1%, and France's CAC 40 increasing by 0.5%. London's FTSE 100 saw a rise of less than 0.1%.

US stock futures indicated a recovery on Wall Street, with S&P 500 futures rising 0.2%, although Nasdaq futures remained in the red due to investor concerns about mounting credit risks linked to AI trade, particularly among heavily indebted data-center operators like CoreWeave. Amelie Derambure, a senior multi-asset portfolio manager at Amundi in Paris, mentioned the big question of monetization still not fully answered, as some doubts lingered about the sustainability of profits and margins from certain AI sector actors.

The weaker dollar contributed to the euro's ascent from its 17-month low, climbing 0.4% to $1.1257. European government bond yields nudged higher on Friday, with Germany's 10-year yield at 3.4355%. Even so, yields remained lower for the week as investors sought safety in government debt amid worries about AI-related companies' finances.

G7 government bond markets were on track for their strongest weekly performance since late May. Oil prices fluctuated, with Brent crude futures at $106.14 per barrel, expected to gain weekly strength due to Middle East supply concerns. Gold benefited from the weaker dollar, climbing to around $4,174.52 per ounce.