May 20, 2022 02:04AM ET
By: AnalysisWatch
European stock markets are expected to open sharply higher on Friday following positive developments in Asia after China cut a key credit indicator to support its struggling economy.
At 2:05 a.m. EDT, German DAX futures were up 1%, French CAC 40 futures up 0.9% and UK FTSE 100 futures up 1.1%.
European stocks were likely to follow the gains in Asia, where Hong Kong's Hang Seng index rose 2.2% and Japan's Nikkei index gained 1.3% after China cut its benchmark five-year lending rate by 15 basis points on Friday, the biggest cut in the country's history.
The rate is used as a benchmark for mortgages and the cut, the second this year, comes as Beijing seeks to revive its battered property sector to prop up the world's second-largest economy.
China's economy, a key driver of global growth, is widely expected to contract this quarter from the same quarter last year, down from 4.8% growth in the first quarter, with the property sector seen as a major drag on growth due to COVID-related mobility restrictions.
Economic news from Europe was more mixed.
UK retail sales rose 1.4% month-on-month in April, well above the expected 0.2% decline, while they fell 4.9% year-on-year, above the forecast 7.2% decline.
However, German producer prices rose again in April, up 2.8% month-on-month and 33.5% year-on-year, suggesting that inflationary pressures will recede for some time.
In the corporate sector, insurer Zurich announced on Friday that it had agreed to sell its Russian operations to members of its local team. The Swiss insurer thus became the latest company to announce its exit from the Russian market.