European Stock Futures Edge Lower; Caution Ahead of U.S. PCE Data

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European Stock Futures Edge Lower; Caution Ahead of U.S. PCE Data
Credit: © Reuters.

By Peter Nurse

Investing.com - European stock markets are expected to open in a muted fashion Friday, ending a generally positive week in a cautious manner ahead of the release of key U.S. inflation data.

At 2 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.1% lower, CAC 40 futures in France traded flat and the FTSE 100 futures contract in the U.K. fell 0.4%.

Equity markets in Europe are on course to post a positive week, with the DAX , CAC 40 , and FTSE 100 , all around 2% higher so far, as investors sought out bargains after a series of weekly losses while also taking comfort from Federal Reserve minutes suggesting the central bank could slow down its tightening if it sees signs inflation is on a downward trend.

This brings the release of the personal consumption expenditure index , due later Friday, into close focus, with the last PCE showing a hefty 6.6% jump over one year.

Still, this positive sentiment in Europe remains fragile, with European Central Bank President Christine Lagarde pointing to a tightening of monetary policy in July even as the war in Ukraine threatens to curb economic growth within the region.

Additionally, industrial profits in China, one of Europe’s main export markets, fell 8.5% in April from a year ago, shrinking for the first time in two years as COVID outbreaks and lockdowns disrupted economic activity.

In corporate news, the U.K. oil and gas industry is likely to be in focus Friday after the country’s government announced on Thursday that it will impose a 25% windfall tax on these companies to support Britons facing a record squeeze on living standards.

BP (NYSE: BP ) responded by stating it will look again at its investment plans, raising the possibility that it reverses previously announced plans to invest 18 billion pounds ($23 billion) in the U.K.

Oil prices stabilized Friday, hovering around a two-month high, supported by expected demand growth at the start of the summer driving season in the United States.

Also propping up the market is the continued expectation that the European Commission will eventually obtain unanimous support of all 27 bloc member states for its proposed new sanctions against Russia, despite Hungary’s opposition to-date.

By 2 AM ET, U.S. crude futures traded 0.1% lower at $114.00 a barrel, after gaining 3.4% during the previous session, while the Brent contract traded largely flat at $114.18, after a gain of 2.7% on Thursday.

Additionally, gold futures rose 0.2% to $1,851.80/oz, while EUR/USD traded 0.2% higher at 1.0750.

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