Stocks - Europe to Push Higher; China GDP Prompts Caution

By Peter Nurse

Investing.com - European stock markets are set to edge higher at the open Friday, helped by hefty gains on Wall Street overnight, although data from China indicating slowing growth may weigh on sentiment.

At 02:15 ET (0715 GMT), the DAX futures contract traded 20 points, or 0.2% higher. France's CAC 40 futures were up 6 points, or 0.1%, while the FTSE 100 futures contract in the U.K. was unchanged. Futures on the eurozone Euro Stoxx 50 benchmark, rose 2 points, or 0.1%.

Wall Street closed in buoyant mood Thursday amid signs that the domestic consumption remains on solid footing. An in-line retail sales release eased any budding concerns about the economic health of the U.S. shopper after a disappointing sales report from retail giant Target (NYSE:TGT).

TheS&P 500 rose 0.8%, the Nasdaq Composite rose 1.1% and the Dow Jones Industrial Average surged 0.9%. All three major averages ended the day in record territory.

That said, stock market gains are likely to be tepid in Europe Friday following the release of growth data out of China, The country reported that its gross domestic product grew 6% in the fourth quarter, meaning economic growth slowed to 6.1% in 2019. While this is in line with expectations, it’s also the country’s weakest growth in nearly three decades.

This matters because Chinese demand, mostly for industrial and manufactured goods, has been a boon for European manufacturers for a number of years. The EU is China's largest trading partner, and China is the EU's second-largest trade partner after the U.S.

“Looking forward, the trade deal with the U.S. is expected to take away some of the uncertainty in China,” according to Nordea analyst Tuuli Koivu, in a research note. “However, we may not see a dramatic rise in growth numbers due to the fact that as growth prospects improve, the authorities feel less need to support growth via monetary or fiscal policy.”

Volkswagen (DE:VOWG_p) is also set to be in the spotlight Friday following a Reuters report that it is set to take a 20% stake in Chinese electric vehicle battery maker Guoxuan High-Tech Co Ltd (SZ:002074)

The deal would mark Volkswagen's first direct ownership in a Chinese battery maker. VW is striving to meet a goal of selling 1.5 million new energy vehicles a year in China by 2025, including plug-in hybrid cars.

On the economic date release slate in Europe later Friday is the U.K. retail sales number for December, at 4:30 AM ET (0930 GMT). EU inflation data are due at 5:00 AM ET (1000 GMT).

At 2:15 AM ET (07:15 GMT), U.S. crude futures traded 0.2% higher at $58.64 and the international benchmark Brent contract rose 0.2% to $64.77. Gold futures for February delivery on New York’s COMEX rose 0.3% to $1,555.25.

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