European Stock Markets Trade Subdued as Investors Digest China’s Economic Performance and Inflation Data
European stock markets traded in a subdued fashion on Friday as investors digested China’s fragile economic performance and more inflation data amid heightened geopolitical tensions.
China’s Trade Data Remains Weak
Economic data released earlier on Friday showed another drop in China’s exports and imports in September, although they shrank at a slower pace, pointing to a gradual stabilization in the world’s second-biggest economy.
Exports fell by 6.2% in U.S. dollar terms last month from a year ago, less than the expected 7.6% drop, while imports also fell by 6.2% compared to a year ago.
This report should offer some encouragement given China’s importance as a market for Europe’s largest companies, but it also illustrates that there is a long road ahead before the Chinese economy returns to vibrant growth.
Inflation Back in Focus
European markets were already on the back foot after Thursday’s U.S. data stoked expectations that the Federal Reserve could yet hike interest rates once more before the end of the year.
Data released earlier on Friday showed that inflation rose 4.9% annually in September, while the European Central Bank policymaker Francois Villeroy de Galhau repeated his view on Thursday that the European Central Bank should keep its key interest rate at its current level for as long as necessary to ensure inflation returns back to its 2% goal.
Israel Calls for Civilians to Leave Gaza
Elsewhere, the conflict in the Middle East looks set to escalate as Israel’s military on Friday called for all civilians of Gaza City, more than 1 million people, to relocate south within 24 hours, as it amassed tanks near the Gaza Strip ahead of an expected ground invasion.
The Israeli military said it would operate “significantly” in Gaza City in the coming days and civilians would only be able to return when another announcement was made.
U.S. Banking Giants to Release Results
In corporate news, the banking sector will be in focus Friday with U.S. banking giants Citigroup, JPMorgan Chase, and Wells Fargo set to release their quarterly results later in the session.
In Europe, Porsche stock rose 0.2% after the German auto manufacturer said deliveries worldwide for the first nine months of 2023 were up 10% on the year, with growth seen in every region but China.
Crude Rises After U.S. Imposes Price Cap Sanctions
Oil prices rose Friday after the U.S. imposed on Thursday the first sanctions on owners of tankers carrying Russian oil priced above the G7’s price cap of $60 a barrel.
Russia is the world’s second-largest oil producer and a major exporter, and this move could tighten global supply.
This news overshadowed U.S. crude oil inventories jumping more than 10 million barrels last week, their most in eight months, while output from the world’s largest producer of the commodity hit a new record high of 13.2 million barrels per day, according to Thursday’s official data.
By 03:40 ET, the Brent futures traded 2.3% higher at $84.79 a barrel, while the WTI contract climbed 2.1% to $87.77 a barrel. Brent is set for a weekly gain of 3.8%, while WTI is set to climb 2.4% after both contracts surged on Monday in the wake of Hamas’ attack on Israel.
Additionally, gold rose 0.6% to $1,894.65/oz, while EUR/USD traded 0.3% higher at 1.0552.