European markets ended the week lower, weighed down by ongoing tensions in the Middle East and persistent concerns about inflation. Shares of Volkswagen offered some support to the broader market after the automaker unveiled a new strategic plan, a rare bright spot for Europe's auto sector, which has been under pressure from weak demand, high manufacturing costs, and intensifying competition from Chinese automakers in its home market.

The Middle East tensions have kept investors on edge, as conflict in the oil-rich region can affect crude supply routes and energy prices, feeding into the inflation picture that central banks are watching. For European policymakers, the concern is twofold: the European Central Bank has been working to bring eurozone inflation back toward its 2% target, while market attention also remains fixed on the Federal Reserve, whose rate decisions influence global borrowing costs and capital flows.

Investors are now focused on upcoming US inflation data, which is expected to provide insight into the Federal Reserve's potential interest rate path. A hotter-than-expected reading could reinforce expectations that US rates will stay elevated for longer, while a softer print would bolster the case for the easing cycle to continue — either way, the data is likely to set the tone for global equities in the week ahead.