European Stocks Edge Lower; Tesco Warns of Stagnating Sales

  • Stock Market News
European Stocks Edge Lower; Tesco Warns of Stagnating Sales
Credit: © Reuters.

By Peter Nurse - European stock markets edged higher Friday, struggling for gains at the end of a bruising week dominated by monetary policy tightening by a number of major central banks.

By 3:50 AM ET (0750 GMT), the DAX in Germany traded 0.5% higher, the CAC 40 in France rose 0.5%, and the UK’s FTSE 100 climbed 0.4%.

The main European indices are on course for hefty losses this week, with the DAX set for a 5% loss, the CAC 40 down 4.7%, and the FTSE 100 3.8% lower, with investors fretting about the potential of a significant global economic downturn in the wake of a series of global central banks tightening monetary policies.

The U.S. Federal Reserve hiked by 75 basis points on Wednesday, its largest increase since 1994, the Swiss National Bank unexpectedly lifted rates by 50 basis points on Thursday, while the Bank of England on the same day raised its interest rates by 25 basis points, hiking for its fifth consecutive meeting.

The Bank of Japan was the outlier, sticking with its strategy of pinning 10-year yields near zero at its policy meeting earlier Friday. However, this has done little to ease worries that inflation and rate hikes are going to curb economic growth for years to come.

In corporate news, Tesco (OTC: TSCDY ) stock fell 0.7% after the U.K.’s largest grocery chain said its sales largely stagnated in the three months through May and warned of an "incredibly challenging market environment," as customers struggle with high inflation.

Santander (BME: SAN ) stock rose 0.7% after Bloomberg reported that the Spanish lender is set to appoint insider Hector Grisi as its chief executive officer, replacing long-time executive José Antonio Alvarez.

The main data release Friday will be the May Eurozone consumer prices number, which is expected to confirm growth of 0.8% on the month, up 8.1% on the year.

Oil prices edged higher Friday, but are still expected to post the first weekly decline since April as aggressive monetary tightening raised fears of significant demand destruction.

Elsewhere, the U.S. imposed sanctions Thursday on a series of companies that help export Iran's petrochemicals, a move aimed at pressuring Tehran to revive the 2015 Iran nuclear deal.

By 3:50 AM ET, U.S. crude futures traded 0.6% higher at $118.31 a barrel, while the Brent contract rose 0.7% to $120.62. 

Additionally, gold futures rose 0.1% to $1,851.25/oz, while EUR/USD traded 0.3% lower at 1.0518.

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