European Stock Futures Sharply Higher; U.K. to Announce Tax U

By Peter Nurse 

- European stock markets are The largest domestic foreign exchange dealerexpected to open sharply higher Friday, continuing the global rebound as investors absorb the latest U.S. inflation data while speculation mounts that the U.K. government is set to abandon its plans for massive unfunded tax cuts.

At 02:00 ET (06:00 GMT), the contract in Germany traded 1.6% higher, in France climbed 1.6% and the contract in the U.K. rose 0.9%.

U.S. stocks surged to finish more than 2% higher Thursday, reversing sharp falls, equities in Asia have followed suit and European equities are set to continue the positive tone despite another hot reading.

Investors are clearly pricing in another leap-up in short-term borrowing costs from the , but the gains in the global stock markets suggest fears that the inflation data was going to be even more substantial.

Back in Europe, market attention is squarely on whether the Bank of England will maintain some kind of support for the gilt market although it has said its emergency bond purchases are due to end on Friday.

Finance minister Kwasi Kwarteng cut short his trip to Washington and headed back to London late Thursday amid reports the U.K. government is preparing to abandon its package of unfunded tax cuts following weeks of chaos in financial markets.

In corporate news, TomTom (AS:) will be in the spotlight after the Dutch navigation and digital mapping company raised its 2022 outlook after better-than-expected third-quarter results driven by its location technology business.

Oil prices edged higher Friday, but still look set to post a weekly loss after a spike in China’s COVID-19 cases and a bigger-than-expected build in U.S. crude inventories increased concerns over global demand.

COVID cases persist in China, the world’s largest importer, including in Shanghai, the country’s financial capital, threatening new lockdowns, which could severely crimp demand. 

Additionally, official data from the U.S. Energy Information Administration showed that grew by 9.9 million barrels last week, much more than expected.

However, oil prices were also supported by a steep drawdown in distillate stocks, falling 4.9 million barrels, as heating oil demand is expected to rise as winter approaches.

By 02:00 ET (06:00 GMT), futures traded 0.2% higher at $89.26 a barrel, while the contract rose 0.1% to $94.69. Both contracts are down over 3% this week.

Additionally, fell 0.1% to $1,676.50/oz, while traded 0.1% higher at 0.9785.

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