European Stocks Flat; U.K. GDP Slumps in June

© Reuters.

By Peter Nurse

AiVIF.com - European stock markets are expected to open in a subdued manner Friday amid uncertainty of the extent of future Federal Reserve tightening as well as the release of U.K. growth data.

At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 0.1% higher, CAC 40 futures in France climbed 0.1%, and the FTSE 100 futures contract in the U.K. rose 0.1%.

Global equities have traded with a positive tone for much of this week, with the broad-based S&P 500 on Wall Street hitting three-month highs on Thursday, following data that showed the U.S. producer price index unexpectedly fell in July.

This followed Wednesday’s weaker-than-expected consumer price index, and raised expectations that the Fed would hike rates by a less aggressive 50 basis points in September instead of the 75 basis points that had been expected earlier in the week.

However, this optimism has been diluted as Fed policymakers have since come out in force to express the need to tighten monetary policy until inflation pressures fully abate.

Back in Europe, the U.K. economy contracted 0.6% in June, a sharp drop from the 0.5% growth seen in May but better than the 1.2% drop expected. The second quarter contracted 0.1%, an early indication of the prolonged recession that the Bank of England forecast last week.

Inflation data from France and Spain are due later in the session, ahead of Eurozone industrial production numbers for June.

In corporate news, Roche (SIX:RO) will be in the spotlight after the Swiss drugmaker announced it has received approval from the U.S. Food and Drugs Administration for its Xofluza drug to treat influenza in children.

Oil prices fell Friday given an uncertain outlook for demand growth, but the market is still heading for its biggest weekly gain since April.

The International Energy Agency and the Organization of Petroleum Exporting Countries provided differing demand views in their monthly market reports on Thursday, with the former raising its forecast for demand growth in 2022 due to gas-to-oil switching while the latter cut its forecast, citing slowing world growth.

Still, Brent was on track to climb more than 4% this week and WTI a weekly gain of more than 5%, rebounding after a drop to a six-month low last week.

By 02:00 ET, U.S. crude futures traded 0.4% lower at $93.97 a barrel, while the Brent contract fell 0.3% to $99.28.

Additionally, gold futures traded flat at $1,807.04/oz, while EUR/USD traded flat at 1.0318.