European stock markets are expected to open slightly higher Friday, as investors digest German inflation data at the end of a largely negative week.
These major cash indices are all on course to register losses this week, while the pan-European benchmark STOXX 600 index has fallen for seven straight days, its worst string of losses since February 2018.
German consumer prices rise in August
German consumer prices rose 0.3% on the month in August, an annual rise of 6.1%, data showed earlier Friday.
This represented a minor slowing from the 6.2% annual increase the previous month, which could pressure ECB policymakers to hike interest rates once more next week given inflation in the eurozone’s largest economy remains more than three times higher than the central bank’s medium-term 2% target.
The European Central Bank has raised rates at each of its past nine meetings and policymakers are now debating whether to raise the deposit rate again, to 4%, or pause.
Weighing against a decision to increase borrowing costs has been the deteriorating regional growth outlook that is boosting recession fears.
Data released Thursday showed that gross domestic product in the eurozone grew just 0.1% in the second quarter compared to the previous three months, and the economic news in the subsequent months has hardly been impressive.
German industrial production fell by more than expected in July, data showed on Thursday. The equivalent data from both France and Spain are due for release later in the session, and should confirm the region’s manufacturing sector remains in a difficult situation.
Japanese 2Q growth revised lower
It’s not only Europe that is struggling economically.
A string of weak economic readings this week have increased concerns about the strength of the recovery of the Chinese economy from its COVID hit, while Friday’s revised data showed Japan’s economy grew less than initially estimated in the second quarter.
Japan’s economy grew an annualised 4.8% in April-June, down from a preliminary estimate of 6.0% growth and below market forecasts for a revised 5.5% expansion.
Apple woes weigh on tech sector
The tech sector is likely to remain in the spotlight Friday as a consequence of Apple’s difficulties in China.
Apple (NASDAQ:AAPL) has seen about $200 billion wiped from its market capitalisation in two days on reports of China curbing iPhone use by state employees.
This comes ahead of an event next week where the world’s most valuable company is expected to unveil its iPhone 15 line-up.
Casino (EPA:CASP) will also be in focus after Euronext said the debt-ridden supermarket retailer will be excluded from a key French equity index of major companies.
Crude weakens but still on course for positive week
Oil prices retreated Friday, falling further from the 10-month peaks seen earlier in the week on concerns about the health of the crucial Chinese economy and weighed by a strong dollar.
Yet, despite these losses, both benchmarks are still on course for gains of around 1% this week on the back of the news that top producers Saudi Arabia and Russia have extended their voluntary supply cuts to the end of the year.
Additionally, data released late Thursday showed that U.S. inventories shrank a hefty 6.3 million barrels in the week to September 1, falling for the fourth consecutive week.