European Stock Futures Lower; Eurozone CPI Looms Large By

© Reuters.

By Peter Nurse 

- European stock markets are Star card trading appexpected to open lower Friday, with investors becoming increasingly worried about the global economic outlook as central banks tighten monetary policy to combat soaring inflation.

At 2 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.9% lower, CAC 40 futures in France dropped 0.7%, and the FTSE 100 futures contract in the U.K. fell 0.5%.

European Central Bank President Christine Lagarde warned in a speech at the central bank’s annual forum earlier this week that the central bank will go "as far as necessary" to bring inflation back down to its 2% target.

The focus will be on Eurozone consumer price data, due later Friday, with investors looking for signs that inflation has peaked. German inflation unexpectedly slowed last month, but the annual CPI for the euro bloc is expected to climb to 8.4% in June, a new record after it reached 8.1% the previous month.

Additionally, manufacturing PMI data for the Eurozone, and especially Germany, the region’s powerhouse, are also due Friday and are expected to show deteriorating confidence in this key sector.

It’s not only Europe where economic growth is slowing. The growth in U.S. consumer spending weakened in May for the first time this year, while Asia's manufacturing activity, with the exception of China, stalled in June, weighed by supply disruptions, rising costs, and persistent material shortages.

China offered a ray of light, as its manufacturing activity expanded at its fastest in 13 months in June, boosted by the lifting of COVID lockdowns.

In the corporate sector, Sodexo (EPA:EXHO) will be in the spotlight after the French food services group reported better-than-expected revenue for the third quarter, citing strong growth in all business segments and geographies, helped by price hikes and post-Omicron volume recovery.

Oil prices weakened Friday, heading for its third consecutive weekly fall, its worst run this year, on concerns about the strength of the U.S. economy, the largest consumer of crude in the world, and as a group of top producers increased supply.

The Organization of Petroleum Exporting Countries and allies decided to stick with its previously announced plan to increase output each month by 648,000 barrels per day in July and August but avoided discussing policy from September onwards.

By 2 AM ET, U.S. crude futures traded 0.8% lower at $104.89 a barrel, while the Brent contract fell 0.6% to $108.33. Both contracts fell around 3% during the previous session, and are on course to fall at least 2% this week.

Additionally, gold futures fell 0.4% to $1,799.30/oz, while EUR/USD traded 0.1% lower at 1.0469.

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