European stock futures rise; U.K. growth contracts in third quarter

By Peter Nurse 

Investing.com - European stock markets are expected to open higher Friday, adding to the previous session’s U.S. inflation-inspired strong gains, even as growth data pointed to the U.K. entering a recession.

At 02:00 ET (07:00 GMT), the DAX futures contract in Germany traded 0.2% higher, CAC 40 futures in France climbed 0.7% and the FTSE 100 futures contract in the U.K. rose 0.8%.

The main European indices closed sharply higher on Thursday, with the DAX leading the way with gains of 3.5%, following their peers on Wall Street after the annual rate of inflation in the U.S. fell by more than expected in October, bolstering hopes of an early end to the current cycle of interest rate increases by the Federal Reserve.

This positive tone is expected to continue Friday, helped by reports from China’s state media that the quarantine time for international travelers had been reduced by two days to five, raising hopes of a greater relaxation of the country’s strict COVID mobility restrictions.

COVID outbreaks in a number of Chinese cities throughout the year, including the financial hub of Shanghai and Guangzhou, a key manufacturing center, have limited economic activity in the world’s second largest economy and a major European export market.

Back in Europe, the U.K. released its latest preliminary growth data, showing that the economy contracted 0.6% on the month in September, also falling 0.2% in the third quarter.

The Bank of England warned at last week’s policy meeting that Britain has already entered a recession that could potentially last two years - longer than during the 2008-09 financial crisis.

Political uncertainty continued in the U.S., with the battles in the states of Arizona and Nevada holding the key to control of the U.S. Senate, three days after Americans cast their final ballots in midterm elections.

Turning to the corporate sector, Richemont (SIX:CFR) reported a hefty first-half net loss after the luxury group took a substantial charge related to its part exit from online fashion retailer YOOX Net-A-Porter.

Daimler Truck (ETR:DTGGe) reported a 27% jump in third-quarter unit sales as the chip shortage that hit the heavy truck business particularly hard a year earlier began to ease.

Oil prices rose Friday, extending the previous session’s gains after the milder-than-expected U.S. inflation release raised hopes of a soft landing for the U.S. economy, the world’s largest.

Also boosting the tone were raised hopes of a relaxation of China’s Zero-COVID policy, even as the oil market looks set for a weekly loss as the surge in cases in the world’s largest importer of crude weighed on the demand outlook.

By 02:00 ET, U.S. crude futures traded 2.3% higher at $88.47 a barrel, while the Brent contract rose 2.3% to $95.77. Both benchmarks posted gains of approximately 1% on Thursday, but are heading for losses of over 3% for the week.

Additionally, gold futures rose 0.4% to $1,761.10/oz, while EUR/USD traded 0.1% higher at 1.0217.