European Stock Futures Lower; Investors Digest ECB Statement

© Reuters.

By Peter Nurse 

Investing.com - European stock markets are expected to open lower Friday as investors digest the rate hike guidance from the European Central Bank ahead of the release of key U.S. inflation data.

At 2 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.7% lower, CAC 40 futures in France dropped 0.7% and the FTSE 100 futures contract in the U.K. fell 0.7%.

The European Central Bank confirmed on Thursday it will end its long-running bond-buying scheme at the start of next month and said it would raise rates by 25 basis points in July, and again in September, potentially by a larger amount as it battles soaring inflation. 

The possibility of a more aggressive hiking cycle later in the year is weighing on sentiment as the Eurozone economy struggles with slowing growth, exacerbated by the war in Ukraine, as well as rampant price increases.

Investors have been focused for months on how quickly central banks will try to normalize monetary policy to curb inflation. The Federal Reserve meets next week and this puts the U.S. May CPI release later in the session firmly in the spotlight.

Ahead of that, economic data due for release in Europe includes Spanish inflation numbers for May and Italian industrial production for April, while ECB President Christine Lagarde is set to speak the day after the central bank’s policy-setting meeting. 

There’s little in the way of quarterly earnings due for release Friday, but Credit Suisse (SIX:CSGN) could be in the spotlight after State Street (NYSE:STT) stated Thursday that it is not looking to buy the embattled Swiss lender, its first outright dismissal of a news report that it was seeking a deal.

Oil prices retreated Friday as the return of new partial lockdowns in China raised fears of reduced demand from the world’s largest crude importer.

Shanghai imposed new mobility curbs on Thursday after China’s largest economic hub recorded a cluster outbreak of COVID-19, just over a week after the country’s most populous city ended a prolonged lockdown.

That said, Brent was still on track for a fourth consecutive weekly gain and WTI for a seventh straight weekly increase with global supply tight and demand from the U.S., the world’s biggest consumer, remaining very healthy.

Both benchmarks on Wednesday marked their highest closes since March 8, when they hit their highest settlements since 2008.

By 2 AM ET, U.S. crude futures traded 0.3% lower at $121.11 a barrel, while the Brent contract fell 0.4% to $122.58. 

Additionally, gold futures fell 0.3% to $1,847.95/oz, while EUR/USD traded 0.2% higher at 1.0631.