By Peter Nurse
Investing.com - European stock markets are expected to open marginally higher Friday, rebounding after the previous session’s selloff in the wake of the ECB’s hawkish message, ahead of the release of a batch of important economic data.
At 02:00 ET (07:00 GMT), the DAX futures contract in Germany traded 0.3% higher, CAC 40 futures in France climbed 0.3% and the FTSE 100 futures contract in the U.K. rose 0.5%.
The European Central Bank eased the pace of its interest rate hikes on Thursday, tightening by 50 basis points, but President Christine Lagarde also signaled further significant tightening remained ahead in the battle against inflation.
“The Governing Council judges that interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to the 2% medium-term target,” Lagarde said, as part of the statement that accompanied the decision.
This hawkish tone prompted investment bank JPMorgan to lift its forecast for how high Eurozone interest rates will go - to 3.25% from 2.50%.
With this in mind, investors will carefully study economic data coming through in the near term to gauge inflationary pressures and growth signals for clues of future central bank moves, with flash PMI data from the Eurozone and the U.K. on deck for the day.
Earlier Friday, U.K. retail sales fell 0.4% on the month in November, a drop of 5.9% on the year, and a disappointing number showing how consumers are struggling with discretionary spending as prices soar.
Crude oil prices edged lower Friday, continuing the previous session’s losses on concerns surrounding future economic activity, but were set for strong gains this week on the back of tightening supply and the prospect of improved Chinese demand.
The ECB was joined by the Bank of England and the Swiss National Bank in hiking interest rates on Thursday, following the lead of the U.S. Federal Reserve, and pointed to more tightening to come. This, coupled with weak economic data, has increased fears of a potential global recession, and thus lower energy consumption.
By 02:00 ET, U.S. crude futures traded 0.2% lower at $75.95 a barrel, while the Brent contract fell 0.1% to $81.12.
Both benchmarks are on course to post weekly gains of over 6%, their biggest weekly gains since early October, helped by the closure of the Keystone pipeline following a leak and by likely resumption of full Chinese demand in 2023 as COVID curbs are lifted.
Gold futures rose 0.3% to $1,793.55/oz, while EUR/USD traded 0.3% higher at 1.0657.