European stock futures mixed; recession fears breed caution

By Peter Nurse 

Investing.com - European stock markets are expected to open in a muted manner Thursday, with risk sentiment hit as investors fret about a global economic slowdown.

At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 0.1% higher, the FTSE 100 futures contract in the U.K. rose 0.2%, while CAC 40 futures in France dropped 0.2%. 

Trading ranges are expected to be tight in Europe ahead of the Good Friday holiday when the U.S. will release the widely-watched monthly nonfarm payrolls data.

European equities had a strong start to the year but sentiment seems to be weakening amid concerns a cooling U.S. economy could lead the rest of the world into recession.

Data released Wednesday showed that the U.S. services sector slowed more than expected in March, adding to signs of a cooling labor market after U.S. job openings dropped to their lowest in nearly two years in February.

Back in Europe, the Eurozone economy expanded at its fastest pace since May in March, according to final PMI estimates from S&P Global, but this growth is not expected to last, given the tightening of credit conditions across the region that started well before last month’s banking issues.

German industrial production climbed 2% on the month in February, data showed Thursday, a slowdown from the revised 3.7% growth seen the prior month.

There was some good news from Asia Thursday, as China's services activity in March expanded at the quickest pace in over 2 years, the Caixin/S&P Global services purchasing managers' index showed, helped by a post-COVID recovery.

However, the International Monetary Fund warned Wednesday that rising geopolitical tensions, mainly between the U.S. and China, risk damaging the global economy, potentially hitting global output by 1% in five years and 2% long term.

Oil prices fell Thursday as the weak U.S. data raised fears about a potential recession in the world’s largest energy consumer, but are still on course for a third consecutive positive week after a fall in U.S. crude inventories and the unexpected OPEC+ output cut.

By 02:00 ET, U.S. crude futures traded 0.5% lower at $80.20 a barrel, while the Brent contract dropped 0.5% to $84.64. 

However, both benchmarks have gained more than 6% this week after the Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, agreed to further cut crude production and U.S. crude oil inventories fell by 3.7 million barrels last week, official data showed Wednesday.

Additionally, gold futures fell 0.1% to $2,033.35/oz, while EUR/USD traded 0.1% lower at 1.0898.