By Peter Nurse
Investing.com – European stock markets are seen opening just higher Friday, rebounding to a degree after the previous session’s sharp losses. However, a weak U.K. GDP release has added to growth concerns.
Concerns that rising numbers of Covid-19 cases, primarily in southeast Asia but also in the more highly-vaccinated west, will blunt progress on the economic recovery have hit sentiment of late.
The major indices in Europe closed sharply lower Thursday, with the DAX in Germany and the FTSE 100 in the U.K. falling 1.7% and the CAC 40 in France dropping 2%. The rebounds in futures this morning would still leave Europe underperforming the U.S. this week – a reminder of how much more heavily weighted growth-sensitive cyclical stocks are in the Old Continent.
The May flash GDP figure for the U.K. showed growth of just 0.8% on the month, a sharp slowdown from 2.0% growth seen the previous month (a figure that was also revised lower). Manufacturing output fell 0.1% in May, while industrial production rose 0.8%, both much weaker than had been expected.
However, news that U.S. drugs giant Pfizer (NYSE:PFE) and German partner BioNTech (NASDAQ:BNTX) are developing a Covid-19 booster shot intended to target the highly transmissible delta variant has provided a lift Friday.
Also of interest, finance ministers and central bankers from the group of 20 largest economies in the world are set to meet later Friday in Venice in person for the first time since the start of the Covid-19 pandemic.
Top of the agenda will be corporate tax reform, with the group expected to endorse the new rules on where and how much companies are taxed that were first proposed by the G7 countries in June.
Elsewhere, oil prices edged higher as traders attempted to balance rising numbers of Covid-19 cases and the associated growth concerns with falling U.S. crude stocks.
The U.S. Energy Information Administration reported Thursday a drop in the country’s crude inventories of just under 7 million barrels, while stating that fuel demand soared to 10 million barrels a day in the week before the July 4 national holiday.
At 2:10 AM ET, U.S. crude futures traded 0.3% higher at $73.15 a barrel, on course for its first weekly decline since mid-May, while the Brent contract rose 0.2% to $74.24.
European Stock Futures Higher; U.K. GDP Release Disappoints
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