European stock futures higher; Eurozone inflation, U.S. payrolls in focus

By Peter Nurse 

Investing.com - European stock markets are expected to open marginally higher Friday, as investors await the release of key Eurozone inflation data ahead of the release of the widely-watched U.S. monthly jobs report.

At 02:00 ET (07:00 GMT), the DAX futures contract in Germany traded 0.4% higher, CAC 40 futures in France climbed 0.5%, while the FTSE 100 futures contract in the U.K. rose 0.4%.

The main European stock indices received a boost earlier this week from a bigger-than-expected drop in the speed of German consumer price rises, raising hopes that the European Central Bank could rein in its aggressive interest rate hikes reasonably quickly.

This brings the release of Eurozone inflation data later in the session firmly into focus. 

The December CPI figure is expected to come in at 9.7% on an annual basis, only a small reduction from the 10.1% growth the prior month, but there is a degree of confidence within the markets that there could be a positive surprise with a bigger drop.

Earlier Friday, German retail sales rose 1.1% on the month in November, but this still represented an annual drop of 5.9%, while the country’s factory orders slumped 5.3% on the month.

The European data can set the stage for the U.S. jobs report later in the session. 

The U.S. ADP private payrolls report, released Thursday, continued to point to a strong labor market despite the Fed’s attempt to tame inflation, and nonfarm payrolls are expected to have continued the theme, rising 200,000 in December, while the unemployment rate is seen staying at a healthy 3.7%.

Such healthy numbers could again stymie bets that an end to rate rises is coming anytime soon.

In the corporate sector, Sodexo (EPA:EXHO) is likely to be in the spotlight Friday after the French catering and food services group beat forecasts for first-quarter sales, as a continued return to the workplace helped its On-site business rebound above pre-pandemic levels.

Oil prices rose Friday after the release of relatively bullish U.S. inventories data for last week, but the market remained on track for a large weekly loss as demand concerns continue to weigh.

Data from the Energy Information Administration, released Thursday, showed that crude stockpiles rose by 1.7 million barrels last week, but the bulk of this growth was driven by a nearly 3 million barrel release from the Strategic Petroleum Reserve.

Additionally, distillate inventories, which include diesel and heating oil, dropped more than expected, and gasoline stocks fell 346,000 barrels, suggesting demand remained strong in the U.S. during the festive period. 

By 02:00 ET, U.S. crude futures traded 0.8% higher at $74.22 a barrel, while the Brent contract rose 0.6% to $79.17. 

That said, both crude contracts were still set to lose around 7% this week on concerns a global recession at the start of 2023 will severely hit demand. 

Additionally, gold futures rose 0.2% to $1,843.90/oz, while EUR/USD traded 0.1% lower at 1.0516.