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Title: European Stock Futures Edge Higher; China's GDP, Italian Politics in Focus

Jul 15, 2022 01:57AM ET

By: AnalysisWatch

European stock markets are expected to open marginally higher on Friday, but gains are likely to be limited as growth data from China disappointed and the political situation in Italy remains tense.

At 02:00 AM ET (0600 GMT), DAX futures in Germany traded 0.1% higher, CAC 40 futures in France climbed 0.1% and FTSE 100 futures in the UK rose 0.2%

Major European indices closed lower on Thursday - the DAX by 1.9%, the CAC 40 by 1.4% and the FTSE 100 by 1.6% - on fears that the US Federal Reserve may come under pressure to raise interest rates by more than the 75 basis points it raised in June after consumer inflation climbed to 9.1% in June, the highest level in 40 years.

However, gains are likely to be limited as investors digest political turmoil in Italy after the widely respected Mario Draghi offered to step down as Italian prime minister after losing the support of one of the country's largest political parties from his broad coalition government.

In addition, the Chinese economy contracted sharply in the second quarter, with GDP falling by 2.6% quarter-on-quarter after rising by 1.4% in the previous quarter. This highlighted the impact of widespread COVID freezes on economic activity in the world's second largest economy and raised doubts about the global recovery.

Dutch navigation and mapping company TomTom (AS:TOM2) reported a wider-than-expected loss for the second quarter, citing high inflation and strained supply chains. Swedish bank Handelsbanken (ST:SHBa) reported a second-quarter profit well below forecasts, while Barry Callebaut (SIX:BARN) plans to restart the first chocolate production lines at its factory in Wieze, Belgium, in early August after an outbreak of salmonella there.

US President Joe Biden will fly to Saudi Arabia later on Friday to try to persuade its Gulf allies to produce more oil to bring down prices. This could prove difficult, however, as the spare capacity of most members of the Organisation of Petroleum Exporting Countries is very low.

At 02:00 AM ET, US crude futures were trading 0.4% higher at $96.16 a barrel, but still down over 8% on the week, while the Brent contract was up 0.7% at $99.76 and trading over 6% lower on the week.

In addition, gold futures gained slightly to $1,706.00/oz, while EUR/USD gained at 1.0018.

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