European Stocks Set for Cautious Open

European stocks were slightly lower on Friday, with both the STOXX 50 and the STOXX 600 falling 0.1%, pausing after gains in the previous two sessions, as traders ended a week packed with monetary policy decisions on a cautious note. The Bank of Japan raised interest rates to a 31-year high, as expected. However, two policymakers dissented and voted to keep rates unchanged, raising concerns among investors about whether the central bank will be able to sustain its tightening cycle. Meanwhile, oil prices extended their decline. Telecom, energy, insurance and auto shares were in the red, while technology stocks outperformed. Shell fell 1.2%, Nestle declined 1%, and Allianz lost 1.3%. Orange tumbled nearly 4%, making it the worst performer on the STOXX 600. On the other hand, ASML Holding gained 2.1% and STMicroelectronics rose 2.2%, ranking among the index's top performers. On the week, the STOXX 50 is little changed while the STOXX 600 is up 0.5%.

European equity markets were poised for a subdued start on Friday after posting gains for two consecutive sessions, with investors weighing the latest decisions from major central banks alongside falling oil prices. On Thursday, the Bank of England left interest rates unchanged but cautioned that a prolonged Middle East conflict could force it to tighten policy, while the Federal Reserve and Bank of Japan both raised rates this week. Oil prices, meanwhile, extended their decline for a third session as Saudi Arabia worked to restore flows through its East-West pipeline, while President Donald Trump is due to meet with Gulf leaders next week. European markets will also focus on fresh economic data, including Germany’s PPI, UK retail sales and the Eurozone current account, for clues on the region’s economic outlook. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were little changed.

European stocks closed firmly higher on Thursday, tracking the positive momentum for stocks worldwide after a pullback in oil and gas prices softened the elevated level for sovereign yields. The Euro STOXX 50 gained 0.9% to 6,323 and the STOXX Europe 600 rose 0.9% to 643. Natural gas benchmarks in the continent and wholesale fuel costs eased after Saudi Arabia signaled its East-West pipeline could return to operation shortly, softening risks of even more aggressive inflation in the Eurozone. Meanwhile, the Fed raised its rates by 25bps, as expected, but the hawkish tone in Chairman Warsh's remarks flattened yield curves across economies with exposure to US credit, also softening long borrowing costs. Banks closed higher, with Santander, BBVA, and Deutsche Bank adding close to 2%. Power-hungry industrials also gained, with Siemens Energy, Schneider, and Siemens jumping between 3.5% and 2.5%.