European Stocks Hold Steady Ahead of Eurozone Inflation Report

European stock markets experienced mixed trading within narrow ranges on Friday, as investors cautiously awaited the release of crucial eurozone inflation data, which will provide valuable insights into the future direction of global monetary policy.

Early trading saw the DAX index in Germany dip 0.2%, while the CAC 40 in France edged up 0.1%, and the FTSE 100 in the U.K. gained 0.1%.

Inflation Data Takes Center Stage

European equities have been under pressure this week due to the upcoming eurozone inflation report, as investors grapple with shifting expectations surrounding global interest rates.

The eurozone CPI data, expected later today, is anticipated to reveal a slight increase to 2.5% year-on-year in May, up from 2.4% in April.

While the European Central Bank (ECB) is widely expected to lower interest rates next week, uncertainty remains about the subsequent path of monetary policy.

Markets are currently pricing in approximately 60 basis points of cuts from the ECB this year. However, data released earlier on Friday revealed a 1.2% decline in German retail sales for April, indicating continued pressure on consumers in the eurozone’s largest economy.

Across the Atlantic, investors are also keenly watching the U.S. PCE price index data, the Federal Reserve’s preferred inflation gauge, due later in the session.

A downward revision to U.S. GDP on Thursday fueled expectations of potential Fed rate cuts this year. However, if inflation remains elevated, such cuts might not materialize.

Renault Unveils Joint Venture

In corporate news, Renault’s stock slipped 0.3% following the announcement of a joint venture with Chinese partner Geely. The collaboration aims to develop combustion and hybrid engines, enhancing competitiveness in their traditional auto business.

Meanwhile, JD Sports Fashion’s stock surged over 5% as the UK fast-fashion retailer rebounded from a January profit warning with sales growth in both Europe and the U.S.

Overall, European markets are cautiously optimistic, awaiting the eurozone inflation report to assess the potential impact on monetary policy decisions. The outcome of this data release could significantly influence market sentiment and future trends.