European Stocks Set for Positive Open

European stocks were little changed on Friday, with both the STOXX 50 and STOXX 600 hovering around the flatline after posting modest gains in the previous session. Investors continued to assess the monetary policy outlook, with the ECB widely expected to raise borrowing costs by 25 basis points next week, while ongoing tensions in the Middle East continued to weigh on sentiment. Meanwhile, traders awaited the US jobs report due later in the day for further clues on the Fed’s next policy moves. Automakers were among the top performers, led by Volkswagen, which surged 5.3% after reaching a major turnaround agreement that helped avert an escalation with unions and shareholder Lower Saxony. Technology stocks also advanced, with ASML Holding rising 1% and Infineon gaining 1.3%. In contrast, chemical and financial stocks were among the biggest laggards, with UniCredit falling 1.5%. For the week, the STOXX 50 was down 1.6%, while the STOXX 600 declined 0.9%.

European equity markets were set to open slightly higher on Friday, tracking gains among global peers as traders scaled back expectations for a Federal Reserve rate hike this month after Governor Christopher Waller said he would support keeping rates unchanged if price pressures continue to ease. Traders now see roughly even odds of a quarter-point Fed hike in September, down from about 70% earlier this week. In Europe, investors will assess German factory orders, Italian retail sales, and UK new car sales data, alongside construction PMI reports from across the region. In corporate news, German carmaker Volkswagen AG’s supervisory board backed a sweeping restructuring that will involve 50,000 additional job cuts, a reduced model lineup, and a smaller industrial footprint. In premarket trade, Euro Stoxx 50 and Stoxx 600 futures were both up around 0.1%.

European stocks closed a choppy session higher on Thursday, halting three sessions of losses as markets assessed the magnitude that higher sovereign yields will hamper economic activity. The Euro STOXX 50 rose 0.3% to 6,382 and the STOXX Europe 600 added 0.4% to 649. Yields halted their surge this week as markets trimmed their hedges against multiple rate cuts by the European Central Bank this year. Fresh data showed that underlying producer inflation gauges in the Eurozone were relatively tame in July, as energy prices alone triggered the surge in the headline gauge to 5.8% annually. Banks gained traction after weakness in the sector this week with Nordea, Deutsche Bank, and ING adding over 1.5%. Auto producers also closed higher with Volkswagen adding 4%, erasing losses from the previous session on news that it will leave the STOXX 50 index.