On Friday, the European stock markets are likely to open down, just like Wall Street did. This is because people are still worried that aggressive monetary tightening will cause a global recession.
At 02:00 ET (06:00 GMT), the DAX futures contract in Germany was down 0.9%, the CAC 40 futures contract in France was down 0.6%, and the FTSE 100 futures contract in the U.K. was down 0.4%.
Wall Street’s main indices ended the day sharply lower, which was bad news for European stocks. The tech-heavy Nasdaq Composite fell 1.4%, the broad-based S&P 500 fell 1.1%, and the blue-chip Dow Jones Industrial Average fell 0.6% to its lowest close in two months.
After this week’s hot inflation report, investors expect the Federal Reserve to raise interest rates again next week by a large amount. This is likely to slow down economic activity in the world’s largest economy and main growth driver even more.
Related: European stock futures are going down, but investors’ feelings are still fragile.
At 05:00 ET (09:00 GMT), the Eurozone CPI for August will be released. It is expected to rise 0.5% from July to August and 9.1% from August to August.
Last week, the European Central Bank raised its key interest rates by a record-setting 75 basis points. It also said that more increases were coming as policymakers tried to stop prices from going up even more.
Thursday, both the World Bank and the International Monetary Fund warned of an upcoming slowdown in the global economy. Indermit Gill, the chief economist of the World Bank, said he was worried about “generalised stagflation,” a time when growth is slow and inflation is high.
These worries have gotten in the way of the news that China’s industrial production and retail sales in August were better than expected.
In contrast, retail sales in the U.K. fell 1.6% in August and 5.4% over the course of the year, according to data released on Friday. This was because people cut back on spending; they didn’t have to because energy and food prices were going up.
In business news, the energy sector is likely to get a lot of attention. On Friday, Germany put the German branch of Russian oil giant Rosneft under trusteeship and gave the federal regulator control of the PCK refinery in Schwedt.
Germany is also close to buying a controlling stake in the struggling gas importer Uniper (ETR:UN01), which could lead to a full takeover of the company by the government.
Oil prices went up a little bit on Friday after falling a lot the day before. However, they were still on track to fall for the third week in a row because people were worried that aggressive monetary tightening would hurt global growth, which would increase demand.
The hot U.S. inflation data has also made the U.S. dollar stronger, which makes oil more expensive for people who want to buy it with currencies other than the U.S. dollar.
Related: European stock futures go down, and a surprise rise in U.S. inflation weighs on sentiment.
By 02:00 ET (06:00 GMT), U.S. crude futures had gone up 0.2% to $85.30 per barrel, while the Brent contract went up 0.3% to $91.07. Both contracts went down by about 4% on Thursday, and they were expected to go down by almost 2% for the week.
Also, gold futures dropped 0.4% to $1,670.55/oz, and EUR/USD fell 0.2% to 0.9979.
