European Stocks To Follow Suit After Overnight Gains In Asia, But Gains To Be Limited.

The Wall Street rise overnight, which followed disappointing U.S. job statistics that raised hopes for a more dovish Fed next week, is anticipated to help European stock markets begin with modest gains on Friday.

After applications for U.S. unemployment benefits surged last week to the highest level since October 2021, US stocks ended Thursday's trading session higher, with the S&P 500 closing at a new high for the year.

Investors have interpreted this indication of labour market weakness in the United States as increasing the likelihood that the Federal Reserve would forego raising interest rates next week, easing the financial strain on the country's economy.

In response to the advances on Wall Street, equities rose in Asia, and it is anticipated that European stocks would do the same.

Gains, though, are probably going to be moderate.  Data released earlier in the day revealed that factory gate inflation in China decreased at its quickest rate in seven years while consumer inflation in China decreased in May from the prior month.

China, the main growth engine in the area and a crucial export market for many of Europe's top corporations, has had a stalling economic recovery, which is now being further complicated by these dismal inflation numbers.

The announcement made by the Fed next week is uncertain, but the next move by the European Central Bank is clearer, with a quarter-point hike being fully priced for Thursday.

Core inflation has not yet peaked, according to ECB President Christine Lagarde, and the vast majority of analysts surveyed by Reuters anticipate another increase of 25 basis points in July.

Oil prices dropped on Friday as a result of concerns that this year's demand growth will be hampered by the world's top oil importer, China. This is as the country is experiencing sluggish economic development and poor inflation statistics.

(Sources: investing.com, reuters.com)