European Stocks Edge Lower Ahead of Key Inflation Data

European stock markets retreated slightly on Friday, as investors awaited crucial inflation data amidst ongoing uncertainty over future interest rate decisions.

At 03:10 ET (07:10 GMT), Germany’s DAX index traded 0.2% lower, France’s CAC 40 slipped 0.1%, and the UK’s FTSE 100 dropped 0.1%.

Anticipation Builds for Eurozone CPI Release

Thursday saw a downturn in European indices, ending a nine-day winning streak. This followed comments from several Federal Reserve officials indicating that interest rates might need to remain elevated for longer, tempering the optimism generated by a milder-than-expected U.S. CPI release.

Focus now shifts to the final eurozone CPI reading for April, expected later on Friday. This report is anticipated to show a 2.4% annual rise in consumer prices, slightly above the European Central Bank’s (ECB) 2.0% medium-term target.

While the ECB is widely expected to cut interest rates in June, there remains uncertainty about the extent of further cuts for the rest of the year. ECB board member Isabel Schnabel emphasized the need for caution regarding additional rate reductions due to the uncertain economic outlook.

Currently, traders have priced in 70 basis points of ECB cuts this year, compared to just under 50 basis points of easing expected from the Fed.

Corporate Sector Movements

• HSBC: HSBC (LON:HSBA) shares fell after a Bloomberg report suggested that its largest shareholder, Ping An Insurance, may reduce its stake in the British bank. Options include further share sales similar to the $50 million sale disclosed last week.
• GSK: GSK (LON:GSK) shares declined by 0.5% following the company’s announcement of raising £1.25 billion ($1.2664) through the sale of its remaining stake in consumer healthcare firm Haleon.
• J Sainsbury: J Sainsbury (LON:SBRY) shares rose 0.6% after the UK supermarket group announced a five-year strategic partnership with tech giant Microsoft (NASDAQ:MSFT).
• ABB: ABB (ST:ABB) shares dropped 1.1% after the Swiss engineering group agreed to acquire the wiring accessories business of German competitor Siemens (ETR:SIEGn) in China, aiming to expand its market reach in the smart buildings sector.

Crude Oil on Track for Weekly Gains

Crude oil prices edged higher on Friday, with both U.S. crude futures and Brent crude on course for weekly gains, buoyed by signs of improving demand and slowing inflation in the U.S.

By 03:10 ET, U.S. crude futures were up 0.4% at $79.59 per barrel, and the Brent contract climbed 0.6% to $83.79 per barrel. Both contracts are set to post weekly gains of over 1%, marking the first weekly increase in three weeks for Brent.

The oil market has been supported by the softer U.S. inflation data, which bolstered expectations for lower interest rates and potential boosts in future economic activity and oil demand. Additionally, a decline in U.S. oil inventories signaled improving demand, especially with the summer travel season approaching.

Precious Metals and Currency

• Gold: Gold futures rose 0.2% to $2,390.70 per ounce.
• Currency: The EUR/USD traded slightly higher at 1.0863.

As investors closely monitor the upcoming eurozone CPI data and Fed policy discussions, markets are expected to remain sensitive to any further indications of economic trends and central bank strategies.