By Peter Nurse
Investing.com - European stock markets are expected to open marginally higher Friday, rebounding after the previous session's sharp losses. At the same time, investors digest surging U.S. inflation, British growth data, and the continuing war in Ukraine.
At 2 AM ET (0700 GMT), the DAX futures contract in Germany traded 0.1% higher, CAC 40 futures in France climbed 0.6%, while the FTSE 100 futures contract in the U.K. rose 0.9%.
European equities closed sharply lower Thursday, with the DAX and the CAC 40 both dropping nearly 3%, after talks between the foreign ministers of both Russia and Ukraine, helped in Turkey, failed to bring about a ceasefire to the conflict between the two countries.
Markets have been roiled over the last couple of weeks as Western nations levied a number of sanctions on Russia as punishment for its invasion of Ukraine, moves which have seen commodity prices, and oil, in particular, soaring to record levels.
Further action is expected on Friday after Reuters reported that the United States, the European Union, and other allied nations are set to revoke Russia's "most favored nation" trading status. This would then allow for the imposition of tariffs on a wide range of Russian goods, further hurting the country’s economy.
Data from the U.K. on Friday showed that the country’s economy grew by 0.8% in January, a stronger rebound than expected after contracting by 0.2% in December.
Financial markets expect the Bank of England to raise rates from 0.5% to their pre-pandemic level of 0.75% next week amid rising price pressures, and this rebound will largely cement those expectations.
These inflationary pressures were in full display in the U.S. on Thursday, as consumer inflation jumped an annualized 7.9% in February, the largest increase in 40 years.
The Federal Reserve also meets next week and is widely expected to raise its Fed funds target rate by 25 basis points, especially in the wake of the hawkish tone from the European Central Bank, which said on Thursday it would stop bond-buying in the third quarter if inflation doesn't fall.
In corporate news, Credit Suisse (SIX:CSGN) could be in the spotlight Friday, after Switzerland’s second-largest bank set new targets on Thursday to nearly halve its exposure to the financing of emissions from oil, gas, and coal by the end of 2030.
Oil prices stabilized on Friday but still looked set for the largest weekly drop since November, amid uncertainty over global production levels in a week marked by talk of potential supply additions, mainly from the United Arab Emirates, as well as additional sanctions on Russia.
By 2 AM ET, U.S. crude futures traded 1.2% higher at $107.33 a barrel, heading for a weekly drop of around 8% after touching a high of $130.50, while the Brent contract rose 1.4% to $110.94, set for a weekly fall of about 7% after hitting a 14-year high of $139.13.
Additionally, gold futures fell 0.5% to $1,991.25/oz, while EUR/USD traded 0.2% higher at 1.1004.