By Peter Nurse
Investing.com - European stock markets are expected to open sharply higher Friday, following the positive lead from Asia after China cut a key lending benchmark, seeking to support its ailing economy.
European equities are set to take their lead from gains in Asia overnight, with Hong Kong’s Hang Seng index up 2.2% and Japan’s Nikkei 1.3% higher, as a result of China cutting its five-year loan prime rate by 15 basis points earlier Friday, the largest cut on record.
That rate is used as a reference rate for mortgages, and the cut, the second reduction this year, comes as Beijing seeks to revive the troubled housing sector to prop up the second-largest economy in the world.
China's economy, a key global growth driver, is widely expected to shrink this quarter from a year earlier, compared with first quarter's 4.8% growth, with the property sector seen as a key drag on growth on the back of COVID-related mobility restrictions.
Back in Europe, the economic news was more mixed.
In the corporate sector, Zurich Insurance (SIX: ZURN ) announced Friday it has agreed to sell its Russian business to members of the local team, with the Swiss insurer becoming the latest company to announce its exit from the Russian market.
Luxury goods group Richemont (SIX: CFR ) will also be in focus after strong American demand for its jewellery and watches boosted net profit and sales in the 12 months to March.
Oil prices edged lower Friday as concerns about weaker economic growth eclipsed expectations of a demand rebound in China as the world's top crude importer eased some COVID-19 lockdowns.
The crude market is on course to end the week on a negative note as investors, worried about rising inflation and more aggressive action from central banks, have been reducing exposure to riskier assets.
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On one hand traders / investors being preached to write off China and on other hand you are advocating effect of China rate cut on sentiments !Like 1