In a mixed trading session on Friday, European stock markets responded to positive British retail sales data while remaining cautious as U.S. debt ceiling negotiations reached a critical point.
As of 03:40 ET (07:40 GMT), Germany's DAX index dipped 0.2%, France's CAC 40 fell 0.3%, and the UK's FTSE 100 gained 0.1%.
April's retail sales figures in the UK exceeded expectations, rising 0.5% from the previous month. This surprising resilience in consumer spending despite a squeeze on living costs has bolstered market sentiment. The previous month had experienced a 1.2% decline in sales due to heavy rainfall keeping people at home.
Investors were further encouraged by a Reuters report suggesting progress in negotiations to raise the U.S. government's debt ceiling. The deal, which is expected to be reached, would increase the ceiling by $1 trillion over two years, potentially averting a damaging default. However, the agreement still needs to pass through the Republican-controlled House of Representatives and the Democratic-controlled Senate before the June 1 deadline.
Despite these positive factors, overall market sentiment remains weak following the unexpected 0.3% contraction in Germany's gross domestic product (GDP) for the first quarter of 2023. This marks the second consecutive quarterly decline, signaling a recession in the largest economy of the region.
Central bankers in the Eurozone also show no signs of easing their aggressive monetary tightening measures, as they remain committed to combating high inflation.
The quarterly earnings season is drawing to a close, with no major releases scheduled for Friday. However, Lufthansa stock dipped slightly after the German airline announced its acquisition of a 41% stake in ITA Airways, aiming to compete with low-cost carriers amid the ongoing challenges posed by the COVID-19 pandemic.
TotalEnergies stock also experienced a 0.4% decline as climate activists attempted to disrupt the company's annual shareholder meeting, emphasizing their concerns about the oil major's environmental impact.
Oil prices stabilized after recent weakness, as Russia downplayed the possibility of further production cuts by OPEC+ at their upcoming meeting. Russian Deputy Prime Minister Alexander Novak expressed expectations that no new measures would be taken by the group, contradicting earlier remarks by Saudi Energy Minister Prince Abdulaziz bin Salman, who had warned speculators to be cautious.
U.S. crude futures traded flat at $71.83 a barrel, while the Brent contract dropped 0.2% to $76.09 as of 03:40 ET. Both benchmarks were on track for modest weekly gains due to tightening U.S. supply and improved fuel demand from the world's largest oil consumer.
In other markets, gold futures rose 0.6% to $1,955.35 per ounce, and the EUR/USD pair traded 0.1% higher at 1.0734.
