European stock futures flat; Eurozone inflation release looms large

By Peter Nurse 

Investing.com – European stock markets are expected to open largely unchanged Friday, with investors digesting mixed Chinese activity ahead of the release of key inflation data on both sides of the Atlantic.

At 02:00 ET (06:00 GMT), the contract in Germany traded 0.1% higher, in France climbed 0.1%, while the contract in the U.K. fell 0.1%. 

European equities are set to trade in a cautious manner as the week, month and first quarter come to a close, with investors seeking clarity over the strength of the recovery in China after the lifting of its COVID-19 restrictions as well interest rate outlooks in the U.S. and Europe.

Purchasing managers’ index data, released earlier Friday, showed that while Chinese activity grew at its fastest pace in 12 years in March, slowed from the prior month, pointing to an uneven recovery in Asia’s largest economy and a major export market for European companies.

Back in Europe, data showed the grew 0.1% on the quarter in the final three months of last year, slightly better than expected, while disappointed, falling 1.3% on the month in February.

However, it’s the data later in the day that will be in the spotlight. It is expected to show that annual CPI grew 7.1% in March, a reduction from the 8.5% growth the prior month. 

There could be an upside to this figure though, judging from the stronger-than-expected German figures published on Thursday.

Markets have largely priced in another 50 basis points in hikes from the this year, and a hot inflation number is likely to cement this expectation.

Across the pond, the Fed’s favorite gauge of inflation, , is due later in the session. This could provide clues as to the ‘s next move on interest rates, with the policymakers potentially having to tread carefully while the effects of fragile bank confidence roll through the economy.

In the corporate sector, Rio Tinto (LON:) is likely to be in focus after the world’s second-largest miner agreed to sell a majority stake in its La Granja project in Peru to First Quantum (NASDAQ:) Minerals (TSX:) as it focuses on flagship developments in Mongolia and the U.S. 

Oil prices traded in a subdued fashion Friday, as traders digested the mixed activity data out of China, the world’s largest crude importer, ahead of the U.S. inflation release.

Optimism surrounding China’s economic recovery, and the associated boost to crude demand, has become a key determinant of prices this year, along with the extent of the Federal Reserve’s hiking cycle and the impact upon economic activity in the U.S., the world’s largest consumer of energy.

By 02:00 ET, futures traded 0.2% lower at $74.23 a barrel, while the contract dropped 0.3% to $78.36. 

Additionally, rose 0.1% to $1,997.80/oz, while traded 0.1% lower at 1.0890.