European stock futures lackluster; U.K. retail sales, U.S. debt talks in focus

  • Stock Market News
European stock futures lackluster; U.K. retail sales, U.S. debt talks in focus - European stock markets are expected to open in a mixed fashion Friday, with investors fretting about growth in the region while a deal to raise the U.S. debt ceiling looks set to go to the wire.

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

Sentiment remained weak in Europe the day after economic data showed a surprise 0.3% drop in German gross domestic product during the first three months of 2023, a second straight quarterly retreat and thus a recession in the region’s largest economy.

Data released Thursday showed that retail sales in the U.K. rose 0.5% on the month in April, but this still represented an annual drop of 3% as high levels of inflation weighed on discretionary spending.

And yet despite these signs of slowing growth, the region’s central bankers show no signs of slowing their prolonged aggressive monetary tightening cycles.

“In order to banish the specter of inflation, we in the Eurosystem have acted resolutely,” Bundesbank President Joachim Nagel said Thursday. “The ECB Governing Council will continue on this monetary-tightening path to overcome high inflation.” 

Investors are also focusing on negotiations over raising the U.S. debt ceiling and avoiding an economically damaging default.

The two sides appear to be closing in on a deal that would raise the government's $31.4 trillion debt ceiling for two years, Reuters reported late Thursday, with just $70 billion separating the groups on a total figure that would be well over $1 trillion.

That said, any agreement would have to pass the Republican-controlled House of Representatives and the Democratic-controlled Senate, with the June 1 deadline fast approaching.

The quarterly earnings season is coming to a close, with no major numbers scheduled this Friday. 

However, Lufthansa (ETR: LHAG ) is likely to be in the spotlight after the German airline announced on Thursday it will take a 41% stake in ITA Airways, as it looks to compete with low-cost airlines in the wake of costly COVID-19 pandemic.

Oil prices edged lower Friday, continuing the previous session's weakness after Russia played down the prospect of further OPEC+ production cuts at its meeting next month.

Russian Deputy Prime Minister Alexander Novak said on Thursday he expects no new steps from the group of top producers at the June 4 meeting, undermining remarks from Saudi Energy Minister Prince Abdulaziz bin Salman earlier in the week that speculators should “watch out.”

By 02:00 ET, U.S. crude futures traded just lower at $71.80 a barrel, while the Brent contract dropped 0.2% to $76.13. 

Both benchmarks were still on course for small gains this week on signs of tightening U.S. supply and improving fuel demand in the world’s largest oil consumer.

Additionally, gold futures rose 0.2% to $1,947.45/oz, while EUR/USD traded 0.1% higher at 1.0736.

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