European stock markets displayed a mixed performance on Friday, with investor sentiment being influenced by China’s economic situation and ongoing concerns about inflation amid geopolitical tensions.
At 03:55 ET (07:55 GMT), Germany’s DAX index showed a 0.2% decline, while France’s CAC 40 dropped by 0.1%. Meanwhile, the FTSE 100 in the United Kingdom managed a slight uptick of 0.1%.
China’s Trade Data Reflects Fragile Condition
The release of economic data earlier on Friday unveiled another decrease in China’s exports and imports for the month of September, albeit at a slower pace, indicating a gradual stabilization in the world’s second-largest economy.
Exports fell by 6.2% in U.S. dollar terms compared to the same month the previous year, which was less than the expected 7.6% decline. Similarly, imports also dropped by 6.2% year-on-year.
While these figures may provide some optimism, they underscore that a robust resurgence in the Chinese economy remains a distant goal, even though China plays a vital role as a market for Europe’s major corporations.
Inflation Back in the Spotlight
European markets were already under pressure following Thursday’s release of U.S. consumer price data, which heightened expectations of a potential interest rate hike by the Federal Reserve before the year’s end.
Data published earlier on Friday revealed that the French Consumer Price Index (CPI) increased by 4.9% annually in September, while the Spanish CPI climbed by 3.5% year-on-year. These numbers were in line with expectations and suggest that the European Central Bank (ECB) may maintain elevated interest rates for an extended period, given that consumer prices continue to significantly surpass the ECB’s medium-term target.
ECB policymaker Francois Villeroy de Galhau reiterated on Thursday his view that the ECB should maintain its key interest rate at the current highest level in its 25-year history for as long as necessary to bring inflation back to its 2% goal.
Escalation in Middle East Tensions
Elsewhere, tensions in the Middle East are escalating as Israel’s military has called for over 1 million residents of Gaza City to relocate south within 24 hours. Israel has also positioned tanks near the Gaza Strip in anticipation of an impending ground invasion. The Israeli military has announced that it will be taking significant actions in Gaza City in the days ahead, with civilians only allowed to return after a subsequent announcement is made.
Upcoming Earnings Reports from U.S. Banking Giants
In corporate news, the banking sector will be under close scrutiny on Friday, as U.S. banking giants Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM), and Wells Fargo (NYSE:WFC) are scheduled to release their quarterly results later in the session.
In Europe, Porsche (ETR:PSHG_p) experienced a 0.2% rise in stock value after the German auto manufacturer reported a 10% increase in worldwide deliveries for the first nine months of 2023, with growth witnessed in all regions except China.
Crude Oil Prices Surge Following U.S. Sanctions
Crude oil prices saw an increase on Friday after the U.S. imposed sanctions on owners of tankers transporting Russian oil priced above the G7’s price cap of $60 a barrel. Russia, the world’s second-largest oil producer and a major exporter, may experience reduced supply as a result of this move.
These developments overshadowed the news of U.S. crude oil stockpiles surging by over 10 million barrels last week, the largest increase in eight months, and a record high output of 13.2 million barrels per day from the world’s largest producer, as reported on Thursday.
As of 03:40 ET, Crude Oil WTI Futures futures traded 2.3% higher at $84.79 a barrel, while the Brent contract climbed 2.1% to $87.77 a barrel. Brent is poised for a weekly gain of 3.8%, while WTI is set to climb 2.4%, following their earlier surge in response to the recent conflict involving Hamas’ attack on Israel.
Additionally, gold futures increased by 0.6% to $1,894.65 per ounce, and the EUR/USD exchange rate traded 0.3% higher at 1.0552.
