European Shares Seen Opening Up As Inflation Worries Ease

European stocks may open on a positive note Friday as January U.S. inflation data reinforced expectations for a June cut to interest rates.

Eurostat will release Eurozone Harmonized Index of Consumer Prices (HICP) data for February later today and it is likely that the data would strengthen the case for the European Central Bank to start easing interest rates from record highs later this year.

Unemployment and final manufacturing Purchasing Managers’ survey results from the euro area along with the U.K. Nationwide house price data may also garner investor attention.

Across the Atlantic, reports on manufacturing activity, construction spending and consumer sentiment may sway sentiment.

New York Federal Reserve Bank President John Williams reiterated on Thursday that the next move for the U.S. central bank will likely be a cut to its interest rate target.

Federal Reserve Bank of San Francisco President Mary Daly, meanwhile, highlighted the shift towards a more data-dependent approach.

Her Atlanta counterpart Raphael Bostic said it will be appropriate to begin cutting interest rates this summer.

Asian markets traded mostly higher as China’s February PMI data beat estimates.

An official survey showed China’s manufacturing activity shrank for a fifth straight month in February, adding to pressure on Beijing to roll out more stimulus measures.

A separate survey by the Caixin/S&P Global revealed manufacturing activity expanded steadily in the month, highlighting an uneven economic recovery.

The purchasing managers’ index (PMI) for China’s non-manufacturing sector improved to 51.4 in February from 50.7 in January.

China’s home sales slump dragged on in February despite renewed efforts by regulators and policymakers to salvage the beleaguered property market.

Treasuries steadied and the dollar index was under pressure, helping gold trade near one-month peak in Asian trading.

Oil rose about half after the U.S. Energy Information Administration said oil demand in the U.S. surged to a four-year high in 2023 and would likely hold near that level through 2024.

U.S. stocks fluctuated before finishing higher overnight as a slew of weak data eased rate concerns.

Weekly jobless claims rose more than expected and pending home sales posted a surprise drop in January while the Federal Reserve’s preferred inflation gauge edged lower on an annual basis in the month, matching expectations.

The tech-heavy Nasdaq Composite and the S&P 500 gained 0.9 percent and half a percent, respectively to reach new record closing highs while the Dow edged up 0.1 percent.

European stocks closed on a mixed note Thursday despite signs of softening inflation in Germany, France and Spain. The pan European STOXX 600 ended largely unchanged.

France’s CAC 40 dipped 0.3 percent while the German DAX rose 0.4 percent and the U.K.’s FTSE 100 finished marginally higher.

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