European stocks retreat ahead of key inflation release; HSBC falls

Investing.com - European stock markets retreated marginally Friday, ahead of the release of key inflation data amid uncertainty over future interest rate moves.

At 03:10 ET (07:10 GMT), the DAX index in Germany traded 0.2% lower, the CAC 40 in France slipped 0.1%, while the FTSE 100 in the U.K. dropped 0.1%.

Eurozone CPI release due 

The main European indices closed lower Thursday, breaking a nine-day winning streak, after a series of Federal Reserve officials said interest rates may need to stay higher for longer, puncturing some of the exuberance that following the milder than expected U.S. CPI release.

There is more inflation data to study Friday, with the final eurozone CPI reading for April due later in the session.

This is expected to show that consumer prices rose by 2.4% on an annual basis in April, marginally above the European Central Bank’s 2.0% medium-term target.

The ECB is widely expected to cut interest rates in June, but traders remain unsure of how many more cuts, if any, the central bank will agree to over the course of the rest of the year.

ECB board member Isabel Schnabel said the central bank may lower rates in June, but should be cautious about further cuts in borrowing costs given uncertainty over the outlook, Japan's Nikkei newspaper reported.

Traders have priced in 70 basis points of ECB cuts this year - a lot more than the just under 50 bps of easing priced in for the Fed.

HSBC falls on stake sale report

Turning to the corporate sector, HSBC (LON:HSBA) stock fell following a Bloomberg report that its top shareholder Ping An Insurance might be looking to cut its stake in the British bank.

The report indicated there are several options including “further share sales, similar to the $50 million sale it disclosed last week.”

GSK (LON:GSK) stock fell 0.5% after the British drugmaker said it has raised £1.25 billion (£1 = $1.2664) from selling its entire remaining stake in consumer healthcare firm Haleon.

J Sainsbury (LON:SBRY) stock rose 0.6% after the U.K. supermarket group said it has agreed a five-year strategic partnership with tech giant Microsoft (NASDAQ:MSFT).

ABB (ST:ABB) stock fell 1.1% after the Swiss engineering group agreed to buy the wiring accessories business of German rival Siemens (ETR:SIEGn) in China, in a move to broaden the company's market reach and complement its regional customer offering within smart buildings.

Crude on track for weekly gains

Crude prices rose Friday, on course for weekly gains on signs of improving demand and slowing inflation in the United States, the largest consumer of crude in the world.

By 03:10 ET, the U.S. crude futures traded 0.4% higher at $79.59 per barrel, while the Brent contract climbed 0.6% to $83.79 per barrel.

Both contracts are on track to post weekly gains of over 1%, Friday, the first weekly increase in three weeks in Brent’s case.

Oil markets have been boosted by the softer-than-expected inflation release, which has increased the prospect of lower rates, potentially lifting future global economic activity and thus oil demand.

A drop in U.S. oil inventories also increased hopes that demand was improving, especially as the travel-heavy summer season approaches.

Additionally, gold futures rose 0.2% to $2,390.70/oz, while EUR/USD traded just higher at 1.0863.