European stock futures lower; British retail sales surprise

By Peter Nurse 

Investing.com - European stock markets are expected to open lower Friday on concerns of slowing economic growth as the banking crisis drifts on.

At 03:10 ET (07:10 GMT), the DAX futures contract in Germany traded 0.4% lower, the FTSE 100 futures contract in the U.K. fell 0.6%, while CAC 40 futures in France traded largely unchanged.

The European banking sector has shown some signs of stability this week, but selling by the smaller regional U.S. banks resumed on Thursday even as Treasury Secretary Janet Yellen sought to reassure investors.

Yellen reiterated on Thursday that she was prepared to take further action to ensure that Americans' bank deposits stay safe, but the strains are showing as borrowing at the Federal Reserve’s discount window was a hefty $110.2 billion as of Wednesday. 

Additionally, lending from the Fed's new Bank Term Funding Program ballooned to $53.7B, while loans to foreign central banks surged to $60B.

At the same time, central banks are continuing their clamp down on inflation, likely weighing on economic activity, as the Bank of England and the Swiss National Bank both hiked interest rates again on Thursday, following last week’s European Central Bank hike.  

Citigroup cut its target for the Stoxx 600 index, expecting the benchmark to end the year at 445 points — around its current level —  down from a 475-point forecast issued just last month.

“Volatility in the global banking sector should shift investors’ attention to recession risks and deteriorating fundamentals,” said Citi, in a note, expecting company earnings to contract 5% to 10% this year.

ECB President Christine Lagarde is set to speak at the European Council meeting later in the session, while European PMIs will be studied carefully as they could have a bearing on monetary policy and markets.

U.K. retail sales rose a stronger-than-expected 1.2% on the month in February, an improvement from the revised 0.9% rise seen in January, which translated into a drop of 3.5% on an annual basis. 

Oil edged higher Friday, ending a largely positive week on the up despite U.S. officials expressing caution over the length of time it would take to refill the country’s Strategic Petroleum Reserve, which has fallen to a near 50-year low.

U.S. Energy Secretary Jennifer Granholm said on Thursday that it will be “difficult” to refill government oil reserves this year, undermining previous indications that the Biden administration will begin restocking if prices traded around $67 to $72 a barrel.

By 03:10 ET, U.S. crude futures traded 0.5% higher at $70.32 a barrel, while the Brent contract climbed 0.5% to $76.25. 

Both crude benchmarks are still on track for a weekly gain of about 3%-4%, recovering from their biggest weekly declines in months last week as the banking sector exacerbated worries about a possible recession.

Additionally, gold futures fell 0.3% to $1,990.55/oz, while EUR/USD traded largely flat at 1.0831.