By Peter Nurse
Investing.com - European stock markets are set to open higher Friday, boosted by more support from the European Central Bank, but gains could be tempered by signs of ongoing weakness in the U.S. labor market.
At 2:20 AM ET (0620 GMT), the DAX futures contract in Germany traded 1.3% higher. France's CAC 40 futures were up 1.1%, while the FTSE 100 futures contract in the U.K. rose 0.8%.
The ECB offered up, on Thursday, another massive jolt of stimulus for the region, practically doubling its planned bond purchases to 1.35 trillion euros ($1.5 trillion). Sovereign bond yield spreads narrowed to their tightest since March in reaction.
Bank chief Christine Lagarde said more largesse was needed, given the likely hit to the region’s economies from the social distancing measures put in place to combat the Covid-19 outbreak.
"The June Eurosystem staff macroeconomic projections see growth declining at an unprecedented pace in the second quarter of this year before rebounding again in the second half, crucially helped by the sizeable support from fiscal and monetary policy.”
This “decision should dent any future speculation about whether or not the ECB is willing to play its role of lender of last resort for the Eurozone,” said analysts at ING, in a research note.
Still,Thursday’s claims data showed the U.S. labor market is taking longer than expected to bounce back from the pandemic, and thus a degree of caution may be needed ahead of the employment report, at 8:30 AM ET (12:30 GMT).
The unemployment rate for May is projected to rise to 19.8% from 14.7% in April, while nonfarm payrolls are estimated to have dropped another 8 million in the month.
In corporate news, Lufthansa (DE:LHAG) will be in the spotlight after an announcement that it will leave Germany's DAX index as of June 22, moving into the second-tier MDAX index, to be replaced by residential landlord Deutsche Wohnen (DE:DWNG).
Oil prices edged higher Friday, but uncertainty still exists as to whether OPEC will commit to extending future production cuts after the current cuts expire at the end of June.
At 2:20 AM ET, U.S. crude futures traded 0.6% higher at $37.62 a barrel. The international benchmark Brent contract rose 0.9% to $40.33.
Elsewhere, gold futures fell 0.8% to $1,712.85/oz, while EUR/USD traded at 1.1373, up 0.3%.