European stock markets are expected to open on a positive note on Friday amidst data that showed the U.S. economy contracting by 0.90 percent in the second quarter, that triggered both fears of a recession as a well as hopes of a slowdown in the Fed’s rate hiking spree. Sentiment would also be influenced by the earnings updates and economic data releases due later in the day.
Data released just a while ago showed second quarter GDP in France growing at 0.5 percent, versus expectations of 0.2 percent growth and the 0.2 percent contraction in the previous period.
On Thursday, European markets had mostly recorded strong gains, as an easing in the Fed’s rate hike bets and strong corporate earnings bolstered investor sentiment. France’s CAC 40 led the rally with a 1.30 percent uptick. The pan European Stoxx 600 added 1.09 percent; Germany’s DAX added 0.88 percent; while Switzerland’s SMI moved up 0.66 percent. U.K.’s FTSE 100 however dropped 0.04 percent.
The Wall Street had closed with decent gains on Thursday amidst strong earnings updates, expectations of a softening in the Fed’s interest rate hikes and data that showed GDP contraction again. Nasdaq-100 rallied 0.92 percent to close at 12,717.87 and the Dow Jones Industrial Average gained 1.03 percent to end at 32,529.63.
The FTSE 100 Futures (Sep) is trading 0.08 percent lower. The DAX Futures (Sep) is trading 0.65 percent lower. The CAC 40 Futures had closed 1.3 percent higher on Thursday.
U.S. Dollar Index, which measures the strength of the Dollar against a basket of six currencies slipped below the 106 level and is currently at 105.97. The surprise contraction in the American economy and the expectations that the Fed would have to be less hawkish, going forward, weakened the Dollar against the basket of six currencies. The EUR/USD pair has strengthened 0.16 percent overnight to 1.0212, while the GBP/USD pair has gained 0.17 percent to 1.2190.
Gold Futures for August settlement added 0.47 percent to trade at $1,758.50 per troy ounce, versus $1,750.3 on Thursday, amidst hopes that the Fed would begin to slow down on its rate hikes.
WTI Crude Futures for September settlement is trading at $96.71, an overnight gain of 0.30 percent whereas Brent Crude Futures for October settlement is trading at $101.87, up 0.04 percent from the previous close, ahead of the OPEC+ meeting next week.
American stock futures point to positive trends, with the US 30 (DJIA) index up 0.04 percent and US500 (S&P 500) up 0.58 percent.
Asian markets are trading mixed despite decent gains in Wall Street on Thursday. India’s Nifty 50 has gained 1.14 percent whereas New Zealand’s NZX 50 and Australia’s S&P ASX 200 are both trading 0.90 percent higher. South Korean Kospi has also added 0.45 percent. Japan’s Nikkei 225 is however trading 0.25 percent lower; China’s Shanghai Composite has also lost 0.72 percent whereas Hong Kong’s Hang Seng is trading almost 2.19 percent lower.
In economic data releases from the region, second quarter GDP readings are due from the Euro Area. Markets are expecting the quarterly GDP to have grown at 0.2 percent, versus 0.6 percent earlier. Annual inflation for the month of July is seen steady at 8.6 percent.
German GDP growth for the second quarter is expected at 0.1 percent, falling from 0.2 percent earlier.
Inflation in July in France is seen rising to 6 percent from 5.8 percent in the previous month.
The KOF Leading Indicators reading from Switzerland for July is seen falling to 95.2, versus 96.9 earlier. Retail sales numbers for June are also due Friday.
U.K is expecting data on Consumer Credit, Mortgage Lending, Mortgage Approvals etc. on Friday.
Major earnings updates due Friday from the region are of AstraZeneca (AZN), Hermes International (HRMS), EssilorLuxottica (ESLX), NatWest Group NWG), Croda Intl (CRDA), Intertek (ITRK) and IAG (ICAG). Standard Chartered (STAN) has reported earnings above market expectations.
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