European stock markets opened cautiously higher on Friday as investors awaited key inflation data from both sides of the Atlantic. The DAX index in Germany traded flat, the CAC 40 in France climbed 0.1%, and the FTSE 100 in the UK rose 0.1%. Earlier, Chinese data showed a mixed picture, with the service sector growing at its fastest pace in 12 years in March, while manufacturing activity slowed from the prior month.
This points to an uneven recovery in the world's second-largest economy and a major export market for European companies. Meanwhile, Eurozone inflation data later in the day is expected to show annual CPI grew 7.1% in March, a reduction from the 8.5% growth in the prior month. The Federal Reserve's favorite gauge of inflation, core PCE price index, is also due later in the session, potentially giving clues as to the central bank's next move on interest rates. In corporate news, Rio Tinto stock rose 0.3% after the miner agreed to sell a majority stake in its La Granja copper project in Peru to First Quantum Minerals.
Oil prices traded in a subdued fashion as traders digested the mixed activity data out of China, the world's largest crude importer, ahead of the US inflation release. Optimism surrounding China's economic recovery and the associated boost to crude demand has become a key determinant of prices this year, along with the extent of the Federal Reserve's hiking cycle and the impact upon economic activity in the US, the world's largest consumer of energy. By 03:40 ET, US crude futures traded 0.5% lower at $74.01 a barrel, while the Brent contract dropped 0.7% to $78.09. In the meantime, gold futures fell 0.2% to $1,993.85/oz, while EUR/USD traded 0.1% higher at 1.0905.
Overall, the mixed Chinese data, combined with the pending inflation releases, have left investors with a cautious outlook on the market.
