European stocks mostly ticked up at the opening on Friday, as markets continued to reap the benefits of warm winter and lower energy costs.
The region-wide Stoxx 600 rose 0.4 per cent, Germany’s Dax climbed 0.2 per cent and the French Cac 40 jumped 0.4 per cent. London’s FTSE 100 was down 0.3 per cent.
The price of European natural gas has fallen to its lowest level since the build-up to Russia’s full-scale invasion of Ukraine last week.
“In the short run European equities have relative strength versus the US, as their composition is less sensitive to interest rates, and they haven’t yet experienced the full dividend of the milder weather and lower energy costs,” said Antonio Cavarero, head of investments at Generali Insurance Asset Management.
US futures slid, with contracts tracking the blue-chip S&P 500 falling 0.2 per cent and the tech-heavy Nasdaq Composite equivalents dropping 0.5 per cent. Thursday’s rally, which saw the S&P 500 rise 0.5 per cent and the Nasdaq climb 0.7 per cent, was a brief respite for investors; the indices are down 2.5 per cent and 2.6 per cent respectively this week.
In Asia, the Hang Seng index fell 1.7 per cent, while China’s CSI 300 lost 1 per cent. Although commerce group Alibaba beat analyst expectations with its fourth-quarter earnings, its stock fell 5.36 per cent, suggesting investor skittishness over China’s economy after its post-Covid reopening.
US personal consumption expenditures data, the Federal Reserve’s preferred inflation metric, is set to be released at 1.30pm UK time. If the data shows that the economy is hotter than expected, it will be taken as further evidence that the Fed will stick to its aggressive rate-rise agenda. In recent weeks, robust retail and employment figures have convinced investors of the need to price in further rises.
Analysts at SEB Research said: “The outlook for core PCE is mixed. Our forecast is for a monthly increase of 0.3-0.4 per cent, slightly below the consensus estimate but still too high to be in line with the Fed’s target.”
The euro was down 0.1 per cent while the dollar index, which measures the greenback against a basket of six peer currencies, was flat.
US Treasuries nudged downwards, with the yields on 10-year and two-year notes both rising 0.01 percentage points to 3.89 per cent and 4.7 per cent respectively. Yields on 10-year German Bunds were flat at 2.47 per cent.
Brent crude rose 1.2 per cent to $83.18 per barrel, while WTI, the US equivalent, also climbed 1.2 per cent — to $76.28 per barrel.
