By Peter Nurse
Investing.com – European stock markets are expected to open largely lower Friday as investors fret about soaring energy prices, tightening monetary policy, and slowing growth.
At 02:00 ET (06:00 GMT), the contract in Germany traded 0.4% lower, in France dropped 0.2%, while the contract in the U.K. rose 0.1%.
Recession fears are starting to mount in Europe, with prices hitting record highs on Thursday adding to inflationary pressures just as Eurozone were confirmed at an annual 8.9% in July, way above the European Central Bank’s 2% target.
This suggests that the region’s will have to add another half-point rate hike in September, to July’s increase, which will exacerbate the risk of recession.
in the Eurozone for the second quarter was revised down on Wednesday to 0.6% from 0.7% quarter on quarter.
There was some relatively good news Friday, as retail sales in the U.K. surprisingly rose on the month in July, but this still represented an annual drop of as British consumers continued to struggle with soaring prices– climbed over 10% in July–reining in discretionary spending.
Consumer sentiment in the U.K. slumped as the record levels of inflation caused the to sink to -44 in August from July’s reading of -41, which was already the lowest since the survey began.
Adding to the negative sentiment was the news that German Chancellor Olaf Scholz is set to testify later Friday over his role as Hamburg mayor in tackling a multibillion-euro tax fraud in a case that threatens to tarnish him shortly after rising to the role of the country’s political leader.
Across the Atlantic, Federal Reserve policymakers were out in force Thursday, expressing the view that further hikes were needed to tame inflation. This puts next week’s Jackson Hole symposium firmly in focus for guidance over how far the Fed intends to go in tightening monetary policy.
Oil prices edged lower Friday, on course for a weekly loss despite a two-day rally midweek, as concerns over a global slowdown dampening demand for crude continue to hold sway.
Data released on Wednesday showing that U.S. crude inventories fell sharply last week helped reassure traders that U.S. demand was holding up despite the high price levels, but lingering recession fears and a possible increase in output by Iran have turned the market negative.
By 02:00 ET, futures traded 0.7% lower at $89.80 a barrel, while the contract fell 0.6% to $95.97. Both benchmark contracts were headed for weekly losses of over 2%.
Additionally, fell 0.2% to $1,768.45/oz, while traded 0.1% lower at 1.0082.