European markets open in red ahead of EU inflation and PMI data

European stock markets are expected to open lower for another day as investors are cautiously waiting for Eurozone inflation and manufacturing PMI amid rising concerns over a global economic slowdown, which more aggressive monetary tightening can bring. 

Dollar on high demand

With safe-haven demand supporting the dollar, the greenback edged higher in early European trading on Friday, trading close to the year's highs. The dollar has recovered quickly after US consumer spending grew less than expected in May, causing yields on benchmark 10-year Treasurys to fall as low as 2.94 per cent. The reason is that investors dumped growth-sensitive assets as concerns mount that a slowdown in the United States would also affect the rest of the world.

Oil prices eased after the OPEC+ meeting

Oil prices dropped again on Friday due to fears of an impending recession. These lowered prices have put the benchmarks on course for their third consecutive weekly decline after falling around 3% on Thursday. After Thursday's sell-off, the market took a breather on Friday as OPEC+ did not surprise the market by saying it would increase oil production in August as scheduled. After a two-day meeting, the OPEC+ producers, including Russia, decided to stick with their output strategy on Thursday. OPEC+ is planning to boost output in July and August by 648,000 barrels per day (bpd), up from its previous target of 432,000 bpd. The group avoided discussing policy from September onward, however.

Events for today

The German inflation rate unexpectedly slowed last month. Still, the annual CPI for the eurozone is projected to hit 8.4% in June, a new record high after reaching 8.1% in May. Investors also await the latest manufacturing PMI data for May. While the manufacturing PMI is forecast to fall to 52 from 54.6 in May. Investors will take this drop as a sign of slowing economic activities.

The slowdown in economic growth isn't limited to Europe. US consumer spending slowed down for the first time this year in May. At the same time, Asia's manufacturing activity, except in China, fell in June due partly to tight supplies, higher costs, and persistent shortages of raw materials.

The Chinese economy showed a glimpse of hope in June, as its manufacturing sector expanded at its fastest pace in 13 months, following the lifting of COVID restrictions.