European Shares May See Soft Start Amid Inflation, Recession Worries

market trends2 100421 19aug22 lt

European stocks look set to open broadly lower on Friday as investors fret over a possible recession in Europe and look ahead to next week's Jackson Hole economic symposium for directional cues.

With the euro zone inflation outlook failing to improve since a July rate hike, there is uncertainty over how big will future rate hikes be.

European natural gas prices continue to climb, posing upside risks to the inflation outlook and threatening to send the continent's economy into recession.

Money markets are now fully pricing in a half percentage point ECB move in September and a 35 percent chance of a bigger 75-basis point move.

Asian markets traded mixed as investors analyze conflicting economic signals from the U.S.

The dollar hit a one-month high and Treasury yields drifted higher, keeping gold under pressure. Oil prices slipped after a two-day rally on signs of improving U.S. demand.

Retail sales and public sector finance data from the U.K. are due later in the session, headlining a light day for the European economic news.

U.S. stocks struggled for direction before ending slightly higher overnight after the release of disappointing home sales data and better-than expected jobless claims and manufacturing readings.

The Dow finished marginally higher, while the tech-heavy Nasdaq Composite and the S&P 500 both edged up around 0.2 percent.

European stocks also closed higher on Thursday as data showed Euro zone inflation reached a new record high of 8.9 percent year-on-year in July.

The pan European Stoxx 600 gained 0.4 percent. The German DAX and France's CAC 40 index rose about half a percent each while the U.K.'s FTSE 100 added 0.4 percent.

For comments and feedback contact: editorial@rttnews.com

Market Analysis

Follow RTT