European Stocks Set for Positive Open

European stocks traded higher on Friday, with both the STOXX 50 and STOXX 600 gaining 0.3%, following losses in the previous two sessions. The rebound came as the bond sell-off eased, offering some relief to investors, although French government bonds remained under pressure amid concerns over the country’s fiscal and political outlook. Investors are awaiting Eurozone inflation data later this morning, with headline inflation expected to accelerate to 3.6%. Tech shares booked strong gains and industrials were also higher while the pharmaceutical and banking sectors were among the weakest performers. ASML Holding (1.4%), Schneider Electric (1.5%), Airbus (1.4%), ABB (1.5%) and Infineon (2.5%) were in the green while UniCredit (-2%), Sanofi (-4.4%) and Commerzbank (-2.2%) traded lower. Despite Friday’s gains, the STOXX 50 is down 2% for the week, while the STOXX 600 has fallen 1.9%, putting both indexes on track for their worst weekly performance since April.

European equity markets were set to open higher on Friday as a pullback in global bond yields improved sentiment, although growing fiscal concerns in France pushed the country’s 10-year government bond yield to its highest level since 2002. Japanese firm Sumitomo Mitsui DS Asset Management sold its entire holdings of French government bonds amid concerns over the country’s fiscal outlook, reallocating funds to German bunds and short-term Japanese government bonds. Investors also monitored volatility in oil markets as the US considered deploying an additional aircraft carrier and 10,000 troops to the Middle East, raising the risk of further disruptions to regional energy supplies and renewed inflation pressures. Meanwhile, investors will assess September Eurozone inflation data, along with Spanish unemployment figures and Italian retail sales. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were both up around 0.2%.

European stocks opened the fourth quarter sharply lower on Thursday as rising global government bond yields continued to weigh on risk appetite. The STOXX 50 and STOXX 600 each fell more than 1%, reaching their lowest levels in about three and a half months as investors adjusted to expectations that major central banks could keep borrowing costs elevated for longer. Financial stocks led the declines, with banks falling more than 3.5%, while automobiles and parts and basic resources dropped between 1.5% and 2%. Chemicals, retail financial services, real estate, and construction and materials also posted losses of more than 1%. Technology stocks were among the few gainers, tracking stronger global peers after Micron Technology delivered an upbeat outlook. Among major STOXX 50 constituents, Banco Santander fell nearly 4%, while LVMH declined more than 2% and both Linde and L’Oréal lost around 2%.