European stocks head for lower open as investors track monetary policy, earnings

Key Points

• The European Central Bank on Thursday announced a 50 basis point hike to interest rates, its first for 11 years, as concerns about runaway inflation outweighed fears of slowing growth.
• Data releases on Friday will include July’s initial flash PMI readings for the euro zone and the U.K., while the Central Bank of Russia will announce its latest interest rate decision.

LONDON — European markets are set for a slightly lower open Friday as investors monitor corporate earnings and try to assess the trajectory of monetary policy.

Britain’s FTSE 100 is seen around 7 points lower at 7,264, Germany’s DAX is set to slip by around 66 points to 13,181 and France’s CAC 40 is expected to lose around 30 points to 6,171.

The European Central Bank on Thursday announced a 50 basis point hike to interest rates, its first hike for 11 years, as concerns about runaway inflation outweighed fears of slowing growth induced by Russia’s war in Ukraine.

The ECB also introduced the Transmission Protection Instrument (TPI), a bond protection plan designed to cap borrowing costs across the region and limit fragmentation for indebted countries in southern Europe.

European stocks closed slightly higher Thursday following the decision, and the euro edged up after a choppy day of trading.

Shares in Asia-Pacific were mixed Friday as investors digested a slight rise in Japanese inflation in June, after the Bank of Japan kept interest rates on hold at ultra-low levels on Thursday.

U.S. stock futures slipped lower in early premarket trade as markets reacted to a fresh batch of corporate earnings and disappointing results from Snap, which sent social media shares plummeting and hit futures on the tech-heavy Nasdaq 100.

On the data front in Europe, British consumer confidence remained at a record low in July as soaring inflation and rising interest rates continued to weigh on morale, according to a monthly index from market research firm GfK. The index held at -41 in July, matching June’s 48-year low and remaining below the levels that have previously been seen before recessions.

The French finance ministry said Thursday that French economic growth will slow sharply next year as geopolitical risks mount, delaying progress on the public sector budget deficit. The ministry now sees growth in the euro zone’s second-largest economy slowing from 2.5% in 2022 to 1.4% in 2023.

Italy’s political uncertainty shows no sign of abating, with a snap national election now scheduled for September 25 after Prime Minister Mario Draghi resigned in the wake of a collapse of his coalition government.

Data releases on Friday will include July’s initial flash PMI (purchasing managers’ index) readings for the euro zone and the U.K., while the Central Bank of Russia will announce its latest interest rate decision as Moscow continues to recalibrate its economy in the face of international sanctions.

Earnings on Friday came from Thales, Danske Bank, Norsk Hydro, Hermes, Sika and Lonza, among others.

Source : CNBC