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Title: European Stock Futures Largely Lower; U.K. Retail Sales Surprise

Aug 19, 2022 02:00AM ET

By: AnalysisWatch

European stock markets are expected to open mostly lower on Friday as investors worry about rising energy prices, tightening monetary policy and slowing growth.

At 02:00 GMT, the DAX futures contract in Germany was trading 0.4% lower, the CAC 40 futures contract in France was down 0.2%, and the FTSE 100 futures contract in the UK was up 0.1%.

Recession fears are beginning to mount in Europe, with natural gas prices hitting record highs on Thursday, adding to inflationary pressures just as the eurozone's annual consumer price level was confirmed at 8.9% in July, well above the European Central Bank's 2% target.

This suggests that the region's central bank will need to add another half percentage point hike to the July rate hike in September, raising the risk of a recession.

Eurozone economic growth for the second quarter was revised down on Wednesday to 0.6% from 0.7% in the previous quarter.

There was relatively good news on Friday as UK retail sales surprisingly rose 0.3% month-on-month in July, but this still represents a 3.4% year-on-year decline as UK consumers continue to struggle with sharp price rises the consumer price index climbed to over 10% in July, which is curbing discretionary spending.

UK consumer sentiment slumped as record levels of inflation caused the GfK Consumer Sentiment Index to fall to-44 in August from July's reading of-41, already the lowest since the survey began.

Oil prices edged lower on Friday, posting a weekly loss despite a two-day rally mid-week, as concerns persist about a slowdown in global growth reducing oil demand.

Data released on Wednesday that showed U.S. crude inventories fell sharply last week helped reassure traders that U.S. demand is holding up despite high price levels, but lingering fears of a recession and a possible production increase from Iran turned the market negative.

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