© Reuters
By Peter Nurse
Investing.com – European stock markets are expected to open higher Friday, with investors attempting to maintain January’s positive tone amid concerns about slowing economic growth and tight monetary policy.
At 02:00 ET (07:00 GMT), the contract in Germany traded 0.4% higher, in France climbed 0.8%, while the contract in the U.K. rose 0.5%.
European stocks have had a strong start to the year, with Germany’s up over 7% year-to-date, helped by hopes that the expected economic slowdown in 2023 will not be as severe as previously feared.
However, these gains remain tenuous, with European Central Bank President warning, at the World Economic Forum in Davos, Switzerland on Thursday, that inflation figures remained “way too high”, reiterating the need for aggressive monetary policy decisions.
Additionally, ECB officials were divided over whether to raise interest rates by 50 or 75 basis points in December, according to from the ECB’s policy meeting last month.
The central bank eventually settled on hiking its deposit rate by 50 basis points, edging down slightly from three straight larger 75 basis-point increases rolled out earlier in 2022.
This tightening has had an impact on German , which fell 0.4% on the month in December, an annual increase of 21.6%, but this was not as big a reduction as expected.
also hiked by 50 basis points in December, having lifted interest rates by a combined 325 basis points in 2022 alone, to their highest since late 2008.
This resulted in disappointing news for retailers over the festive period, as U.K. fell 1% on the month in December, an annual drop of 5.8% as the monetary tightening and the cost of living crisis weighed on discretionary spending.
In corporate news, Ericsson (ST:) is likely to be in the spotlight after the Swedish telecommunications company reported fourth-quarter core that missed expectations for the third quarter in a row, as sales of 5G equipment slowed in high-margin markets such as the United States.
Oil prices rose Friday, on course for a second straight positive week, on continued optimism that the brightening outlook for the Chinese economy will result in increased demand from the world’s largest crude importer.
Earlier this week, in their monthly reports, both the and the forecast that a Chinese economic recovery will spur record-high crude demand in 2023.
This confidence has helped the market look past data showing a bigger-than-expected build in U.S. inventories, after the Energy Information Administration reported an increase of over 8 million barrels on Thursday.
By 02:00 ET, futures traded 0.4% higher at $80.94 a barrel, while the contract rose 0.4% to $86.48. Both closed 1% higher on Thursday, near their highest closing levels since the start of December.
Additionally, rose 0.3% to $1,929.25/oz, while traded 0.1% higher at 1.0832.
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