European stocks are anticipated to open positively on Friday, buoyed by optimism surrounding China’s economic outlook and potential stimulus measures.
Recent data from S&P Global indicates that China’s manufacturing sector experienced a resurgence in October. Companies accelerated production and purchasing activities due to increased demand and renewed confidence, reflected in the Caixin Manufacturing Purchasing Managers' Index rising to 50.3 from 49.3 in September.
In addition, China's residential property sales witnessed an on-year increase for the first time in 2024, bolstering market sentiment.
Asian markets broadly posted gains. Although Chinese and Hong Kong stocks made modest advances ahead of a pivotal meeting of China’s top legislative body from November 4-8, there's anticipation of approval for over 10 trillion yuan ($1.4 trillion) in further borrowing to support economic stability.
Conversely, Japan’s Nikkei index fell over 2 percent, despite the yen recovering some early losses following weak manufacturing data releases.
London copper prices edged upwards, influenced by a weaker dollar, while investors await critical U.S. job numbers and a report on manufacturing activity later today, for insights into the Federal Reserve’s interest rate path.
In Europe, the release of factory purchasing manager data and U.K. house price statistics will headline an otherwise light day for economic announcements.
The U.S. dollar steadied against other major currencies, while gold saw a slight uptick. The latest core PCE inflation data indicated ongoing challenges for the Fed in controlling inflation in the effort to stabilize the economy.
Oil prices jumped nearly 2 percent in Asian markets amid reports of Iran planning an attack on Israel from Iraqi territory.
Corporate earnings reports are also in focus. Apple disclosed lower-than-expected sales in China, while Amazon and Intel provided strong forecasts. Additionally, Exxon Mobil and Chevron are slated to release their earnings reports before the U.S. trading session opens.
Investor caution increased as U.S. stocks sharply declined. Meta Platforms and Microsoft highlighted potential cost increases related to artificial intelligence, contributing to market trepidation.
Economic statistics revealed consumer spending exceeded forecasts in September. Concurrently, unemployment claims dropped to a five-month low, and labor costs rose at their smallest pace in over three years, indicating cooling wage growth. The PCE index, favored by the Federal Reserve as an inflation measure, showed a minor decrease in the headline inflation rate to 2.1 percent year-over-year in September. Core PCE inflation remained stable at 2.7 percent, inciting worries that the Fed might decelerate the pace of rate reductions.
The technology-heavy Nasdaq Composite fell 2.8 percent, the S&P 500 declined 1.9 percent, and the Dow decreased by 0.9 percent.
In Europe, equity markets experienced a downturn on Thursday as reports revealed a higher-than-expected rise in Eurozone inflation. The pan-European STOXX 600 index fell by 1.2 percent, Germany's DAX decreased by 0.9 percent, France’s CAC 40 lost 1.1 percent, and the U.K.'s FTSE 100 dropped 0.6 percent.