By Peter Nurse
Investing.com - European stock markets are expected to open lower Friday, with sentiment hit by the broad sell-off on Wall Street overnight amid fears that aggressive central bank tightening will be needed to tame soaring inflation, severely hitting economic growth.
All three main Wall Street benchmarks closed sharply lower Thursday, with the blue chip Dow Jones Industrial Average falling more than 1,000 points, or 3.1%, its worst daily performance since October 2020.
The tech-heavy Nasdaq Composite fell 5%, its biggest one-day percentage decline since June 2020 and its lowest finish since November 2020.
The Federal Reserve raised the benchmark interest rate by a half-point on Wednesday, its biggest hike in two decades, but fears are mounting that larger hikes will be needed to combat inflation running at levels not seen in four decades.
The Bank of England lifted its benchmark rate on Thursday to the highest level since 2009 while warning that Britain could see inflation at 10%, and the head of Germany's Ifo institute said Friday that the European Central Bank must quickly raise interest rates to combat high inflation in the Eurozone.
Worries are also mounting about the economy in China, the world’s second-largest economy and regional growth driver, as the country’s decision-makers appeared to double down on its zero-COVID policy, a strategy that is seen upsetting global supply chains and hitting growth.
Back in Europe, German industrial production fell a massive 3.9% on the month in March, from a rise of 0.2% the previous month, illustrating the economic difficulties the Eurozone’s largest economy is suffering.
However, the major economic release Friday comes from the U.S., with the monthly official jobs report likely to be studied carefully for clues on labor market strength and the likely impact on monetary policy.
In corporate news, ING (AS: INGA ), the largest Dutch bank, reported a disappointing first-quarter profit, with its earnings hit by hefty provisions at its wholesale banking division.
Oil prices edged higher Friday, climbing for the third straight session, on persistent concerns over the tightness of global supply, particularly with the European Union, the world's largest trading bloc, set to phase out imports of Russian oil.
The Organization of the Petroleum Exporting Countries and allied producers, a group known as OPEC+, agreed on Thursday to raise June production by a modest 432,000 barrels per day, ignoring calls from consuming nations to increase output more to lower prices.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.