European Stock Futures Edge Lower; Caution Ahead of U.S. Payrolls

By Peter Nurse

Investing.com - European stock markets are expected to open marginally lower Friday, with investors cautious ahead of the release of the key U.S. monthly jobs report, which could guide future Federal Reserve monetary policy.

At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 0.4% lower, CAC 40 futures in France dropped 0.6%, and the FTSE 100 futures contract in the U.K. fell 0.4%.

The August U.S. jobs report is due for release at 08:30 ET (12:30 GMT), and will be widely watched as it’s one of the last pieces of economic data the Fed will see before its September meeting, where it is set to raise its benchmark interest rate again.

Nonfarm payrolls are expected to have increased by 300,000 jobs last month after surging 528,000 in July, and the release comes shortly after Fed Chair Jerome Powell warned of the need to continue to tighten monetary policy to quell inflation even at the expense of rising unemployment.

The size of the interest rate hike the U.S. central bank will announce later this month is in doubt, but an increase would mark the 20th straight month of job growth, suggesting the labor market is coping with the aggressive rate hikes already instigated.

The European Central Bank is also expected to lift its interest rates next week, and with record-high inflation fast approaching double digits the question is whether the central bank will go for a 50-basis-point hike, as it did in July, or an even larger move.

Eurozone producer prices are due later in the session, and are expected to show a rise of 2.5% on the month in July, a hefty rise of 35.8% on the year.

In corporate news, Lufthansa (ETR:LHAG) will be in the spotlight Friday after pilots at the German airline went on strike, forcing the cancellation of hundreds of flights.

Oil prices bounced Friday, but were still on course for substantial losses this week on concerns China’s COVID-19 restrictions and slowing global growth will hit demand.

Additionally, the Group of Seven finance ministers are expected to firm up plans on Friday to impose a price cap on Russian oil, trying to hit Moscow’s finances while keeping crude flowing.

The Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, are due to get together at the start of next week, and traders will be looking to see the output levels agreed given top producer Saudi Arabia floated the idea of cuts earlier this week.

By 02:00 ET, U.S. crude futures traded 1.6% higher at $87.94 a barrel, while the Brent contract rose 1.5% to $93.70. Both benchmark contracts slid 3% in the previous session to two-week lows, and are on track to fall about 5% for the week.

Additionally, gold futures rose 0.2% to $1,713.40/oz, while EUR/USD traded 0.3% higher at 0.9971.