European Stock Futures Edge Higher; Nonfarm Payrolls in Focus

© Reuters

By Peter Nurse

AiVIF.com - European stock markets are expected to open marginally higher Friday, boosted by generally positive quarterly corporate earnings, but the upcoming U.S. payrolls data is likely to prompt a degree of caution.

At 02:00 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.2% higher, CAC 40 futures in France climbed 0.1%, and the FTSE 100 futures contract in the U.K. rose 0.1%.

European equities have registered gains this week as largely positive corporate earnings have largely overshadowed fears that the region is heading for an economic slowdown later this year.

The Bank of England warned Thursday of a long-lasting recession, starting in the fourth quarter of this year, as it increased interest rates by 50 basis points in order to tackle inflation running at 40-year highs.

The Reserve Bank of India continued the theme early Friday, hiking rates for the third time in as many months, but the main focus will be on the closely watched U.S. July employment report later in the session as investors look for clues on how the Federal Reserve will view the strength of the world’s largest economy.

Nonfarm payrolls are seen increasing by 250,000 jobs last month, a slowing in growth from 372,000 in June. That would mark the 19th straight month of payrolls expansion but would be the smallest increase in that span.

The cooling in job growth could ease pressure on the Fed to deliver a third straight interest rate increase of 75 basis points at its next meeting in September.

Elsewhere, investors will also keep an eye on the second-quarter earnings season, with a number of major European companies reporting.

German insurer Allianz (ETR:ALVG) posted a hefty 23% fall in second-quarter net profit, dampened by volatile markets, but still confirmed its target for the full year.

Deutsche Post (ETR:DPWGn) reported double-digit growth in revenue and earnings and confirmed its outlook for 2022, as its flourishing freight and express business continued its strong start to the year.

Lufthansa (ETR:LHAG) will also be in the spotlight as the German airline and labor union Verdi sealed an agreement on a wage deal for ground crew that will help avert more strikes after last month’s chaos.

Oil prices edged higher Friday, but are on course for hefty losses this week after falling to a six-month low on concerns a global economic slowdown will severely hit demand.

The oil market has now given back all the gains prompted by Russia’s invasion of Ukraine with growth worries ratcheted up after the Bank of England's recession warning.

Still, supply remains tight, with the Organization of Petroleum Exporting Countries and its allies, a group known as OPEC+, increasing production by just 100,000 barrels per day in September, equal to about 0.1% of global oil demand.

By 02:00 AM ET, U.S. crude futures traded 0.6% higher at $89.08 a barrel, on course for a weekly loss of almost 10%, while the Brent contract rose 0.4% to $94.50, set for a weekly loss of 14%.

Additionally, gold futures rose 0.1% to $1,808.05/oz, while EUR/USD traded 0.2% lower at 1.0228.