Investing.com - European stock markets are expected to open slightly lower Friday, as investors bank profits after a strong week, waiting for the start of the next quarterly earnings season.
At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 0.1% lower, the FTSE 100 futures contract in the U.K. fell 0.1%, while CAC 40 futures in France traded largely flat.
The main European stock indices posted healthy gains Thursday, with the broad-based Stoxx 600 index rising 0.6%, its fifth positive session in a row, the longest run of daily gains in nearly three months.
Optimism over U.S. ‘soft landing’
These gains followed the release of data showing rapidly cooling inflation in the U.S., suggesting that the Federal Reserve may be close to ending its aggressive rate-hiking cycle, probably after one more increase later this month.
This has raised expectations that the U.S. economy, the largest in the world and a major global growth driver, may avoid a recession this year, prompting ‘soft landing’ optimism.
Weakness in U.K., China
The economic situation is less impressive in Europe, particularly in the U.K., where data released on Thursday showed that its economy contracted in May. Yet inflation is running at the highest level in the G7, and more than four times higher than the Bank of England’s 2% medium-term target.
This points towards further interest rate hikes ahead, further weighing on economic activity and making a recession later this year a distinct possibility.
Additionally, the latest economic signals from China, a major export market for many of Europe’s largest companies, indicate the second-largest economy in the world is still struggling to recover from its COVID hit.
Ericsson reports sharp drop in 2Q profit
The new European quarterly earnings season starts in earnest next week, but Ericsson (ST:ERICb) has reported a 62% fall in second-quarter adjusted operating profit on Tuesday, slightly beating market expectations.
The Swedish telecom equipment maker cited increasing demand for 5G despite “challenging market conditions”.
Results from British luxury fashion house Burberry (LON:BRBY) will also be in the spotlight Friday, while across the pond a number of the largest American banks are scheduled to report their quarterly earnings.
Oil on course for another positive week
Oil prices stabilized Friday, but remained on course for their third consecutive weekly gain on the prospect of tighter supplies as well as soft U.S. inflation data.
Several Libyan oil fields, including the country’s second-largest, Sharara, were shut down on Thursday, while a suspected pipeline leak suspended exports from Nigeria’s Forcados terminal.
These disruptions in supply follow last week’s announcement of additional output cuts by Saudi Arabia and Russia, and point to tighter oil markets in the coming months.
By 02:00 ET, the U.S. crude futures traded 0.2% higher at $77.04 a barrel, while the Brent contract climbed 0.2% to $81.48.
Both contracts traded near their highest levels since late April, and were on track to rise around 4% this week.
Additionally, gold futures fell 0.1% to $1,962.25/oz, while EUR/USD traded largely flat at 1.1221.