Peter Nurse 

The European Stock Markets are likely to open higher Friday after China reduced a crucial lending threshold. This is in support of its economy that’s currently suffering.

The contract in Germany was trading 1% higher at 2:05 AM ET (605 GMT). In France, the contract rose 0.9% while the one in the U.K. rose by 1.1%.

European equities are set to take their lead from gains in Asia overnight, with Hong Kong’s up 2.2% and Japan’s 1.3% higher, as a result of cutting its five-year loan prime rate by 15 basis points earlier Friday, the largest cut on record.

It is the rate used to reference mortgage rates. This year’s cut was the second in a series of reductions.  

China is a major global growth engine and China’s economy will shrink from last year’s quarter. This compares with China’s first quarter growth of 4.8%. The property sector, which has been subject to COVID-related mobility restrictions, was seen as a significant drag on China’s economic growth. 

The economic news in Europe was mixed. 

U.K. rose 1.4% on the month in April, much stronger than the expected fall of 0.2%, while dropping 4.9% , ahead of the predicted  7.2% fall. 

However, German factory gate prices rose again in April, climbing 2.8% on the month, a hefty jump of 33.5% on the year, suggesting inflationary pressures will take some time to disperse. 

Zurich Insurance, SIX:, announced Friday that it had agreed to sell the Russian operations to local employees. It is now the latest Russian company to exit the market. 

Luxury goods group Richemont (SIX:) will also be in focus after strong American demand for its jewellery and watches boosted net profit and sales in the 12 months to March.

Friday’s oil prices fell as worries about China’s economic slowdown outweighed expectations that China would see a rebound. COVID-19 locks were lifted to ease some COVID-19 restrictions.

Crude market will end week with a negative outlook as investors are worried about inflation rising and aggressive central bank action.

Futures were trading 0.7% less at $109.14 per barrel by 2:05 AM ET. Contract prices fell 0.5% to $111.52 

Also, the price rose 0.2% at $1,845.50/oz. However, it traded flat at 1.0585.