European Stock Futures Edge Higher; Turbulent Week Draws to a Close

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Investing.com – European stock markets are expected to open marginally higher Friday, with investors continuing to digest the prospect of tighter monetary policy, the ramifications of more sanctions on Russia, and potential French political turmoil.

At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.2% higher, CAC 40 futures in France climbed 1% and the FTSE 100 futures contract in the U.K. rose 0.9%.

Despite these gains, European equity markets are set to end the week largely lower, with the DAX down around 2.5% so far, the CAC 40 down 3.3%, and the pan-Europe STOXX 600 index 0.7% weaker.

The prospect of aggressive global rate hikes has rattled investors this week, with the U.S. Federal Reserve signaling that it was prepared to act more quickly than previously guided to contain rampant inflation. 

The policymakers at the European Central Bank were not as hawkish, but still appeared keen to unwind stimulus, according to the accounts of their March meeting, released Thursday.

“A large number of members held the view that the current high level of inflation and its persistence called for immediate further steps towards monetary policy normalisation,” the accounts showed.

Elsewhere, the war in Ukraine continues, with many Ukrainians being evacuated from eastern cities before an anticipated major Russian offensive.

Russian troops have been accused of committing atrocities against Ukrainian civilians, something denied by Moscow. This has resulted in the United Nations General Assembly suspending Russia from the U.N. Human Rights Council, the U.S. Congress removing its “most favored nation” trade status, and the European Union agreeing to ban coal imports, the first time that sanctions have targeted Russia’s crucial energy revenues.

Also on the radar is the risk of a political upset in France, with far-right leader Marine Le Pen very close to incumbent Emmanuel Macron in the opinion polls ahead of Sunday’s first round of the French presidential election.

Oil prices edged higher Friday but are still heading for weekly losses of over 3%, weighed by the decision of a number of major consuming nations to release massive amounts of crude from emergency reserves as well as China’s worsening demand outlook as its COVID outbreak persists. 

International Energy Agency member countries announced earlier this week that they would release 60 million barrels of oil, adding to the 180 million barrel release announced by the United States last week, in order to try and replace the output lost in the wake of Russia’s invasion of Ukraine.

Additionally, China’s COVID-19 outbreak appears to be worsening, with new case numbers topping 21,000 on Thursday. Shanghai’s lockdown was supposed to end earlier this week but is still in place, and traffic congestion levels at peak hours are 40% lower than a year ago.

By 2:05 AM ET, U.S. crude futures traded 0.6% higher at $96.56 a barrel, on course for a loss of 3.7% this week, while the Brent contract rose 0.5% to $100.94, down 4.3% so far this week.

Additionally, gold futures fell 0.3% to $1,931.20/oz, while EUR/USD traded 0.1% lower at 1.0868.