By Peter Nurse
Investing.com - European stock markets edged higher Friday, in cautious trading after the U.K. economy contracted in the second quarter.
The U.K. economy shrank in the three months through June, for the first quarter in five, with gross domestic product falling 0.1%, a slightly better outcome than the 0.2% expected but a sharp drop from the 0.8% gain posted in the previous quarter.
The economy had grown for five straight quarters since the second wave of the COVID-19 pandemic, but the Bank of England forecast last week that it is expected to head into a long recession later this year as the global surge in inflation puts intense pressure on discretionary spending.
Global equities have traded with a positive tone for much of this week, helped by U.S. inflation pointing to easing pressures, which raised expectations that the 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.
Eurozone industrial production numbers for June are due later in the session, and are expected to show a slowing in growth.
In corporate news, Flutter (LON: FLTRF ) stock rose 7.7% after the world’s largest online betting firm said it expects a turnaround in the second half of the year after posting a 20% fall in first-half earnings .
Roche (SIX: ROG ) stock rose 1.1% 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 edged higher Friday, heading for its biggest weekly gain since April, but there remains a great deal of uncertainty over the market’s future direction.
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.
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