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Investing.com – European stock markets are set to open mixed Friday, with investors searching for direction after the sharp losses of the previous session interrupted the remorseless move higher of the last month.
At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.9% higher. France’s CAC 40 futures were down 0.2%, while the FTSE 100 futures contract in the U.K. fell 0.6%.
Stock markets sold off aggressively Thursday, after the Federal Reserve had warned of a slow recovery for the U.S. economy, the world’s largest, from the ravages of the Covid-19 virus as well as renewed fears of a second wave as economies are gradually reopened.
The three major U.S. stock indices fell more than 5%, posting their worst day since mid-March, while the three main indices in Europe–the DAX, the CAC 40 and the FTSE 100–all dropped around 4%.
However, this selloff came after equities had been on the tear since late March, with the NASDAQ Composite reaching record highs and the S&P 500 climbing over 40% from March lows in the U.S.. Europe has seen a similar picture.
This has created a difficult decision for investors – do they accept this hefty drop as a blip and continue positioning for the upward trend, or is this move lower the start of a concerted selloff?
“Certainly there are going to be some second-wave concerns so it is right for the market to be worried about that…we also had seen an incredible rally from the bottom so the idea that investors might be looking to take some profits here is certainly what’s driving the sell-off as well,” said Lori Heinel, State Street (NYSE:STT) Global Advisors deputy global chief investment officer, Bloomberg reported.
The latest Gross Domestic Product data from the U.K., usually one of the early G7 members to release their preliminary numbers, may help investors choose a path, and the news earlier Friday wasn’t good.
Britain’s economy suffered a record collapse during April’s coronavirus lockdown, with GDP dropping 20.4% on the month, weaker than the predicted 18.4% collapse.
In corporate news, U.K.-based publishing and education company Pearson (LON:PSON) may be in the spotlight after it was reported that activist investment firm Cevian Capital had built a stake of just over 5%.
French catering firm Sodexo (PA:EXHO) could also be in focus after dropping out of the CAC 40 Index following a quarterly review, to be replaced by call-center operator Teleperformance (PA:TEPRF)
Oil prices continued to head lower Friday, heading for the first weekly loss since late April on fears a second Covid-19 wave could derail a fragile recovery, while swelling stockpiles raised fresh concerns about excess supply.
At 2:05 AM ET, U.S. crude futures traded 2% lower at $35.61 a barrel. The international benchmark Brent contract fell 1.7% to $37.89.
Elsewhere, gold futures fell 0.2% to $1,736.95/oz, while EUR/USD traded at 1.1314, up 0.2%.
