By Peter Nurse 

- European stock markets are expected to open lower Friday, with sentiment hit by central banks tightening monetary policy as cases of Omicron-variant Covid-19 soar.

At 2:05 AM ET (0705 GMT), the DAX futures contract in Germany traded 0.3% lower, CAC 40 futures in France dropped 0.7% and the FTSE 100 futures contract in the U.K. fell 0.5%.

Two of Europe’s senior central banks took steps to combat surging inflation on Thursday, with the Bank of England raising interest rates for the first time since the pandemic started and the European Central Bank saying it will cut its bond purchases in three months' time.

The Bank of Japan continued the theme by dialing back its emergency pandemic funding earlier Friday, after the Federal Reserve upped the pace of the tapering of its bond-buying program earlier in the week.

The general trend towards tightening monetary policy appears to be clear, even though the different paths taken by central banks underline deep uncertainties about how the fast-spreading Omicron variant will hit economies. 

The U.K. recorded a record number of daily coronavirus cases for the second day running, with almost 90,000 infections confirmed on Thursday. France has tightened the restrictions on arrivals from the U.K., while Italy has done so for the rest of the EU. Over in the U.S., President Joe Biden warned that unvaccinated Americans face “a winter of severe illness and death.”

Adding to the negative sentiment, tensions between China and the U.S. flared again after the Biden administration imposed trade restrictions on more than 30 Chinese research institutes and entities.

In corporate news, Credit Suisse (SIX:CSGN) is likely to be in the spotlight Friday after the Financial Times reported that Eric Varvel, chairman of the Swiss lender’s investment bank, is in discussions to leave the company.

The European economic data slate is headed up by the November consumer price index for the Eurozone, which is expected to show inflation remains elevated, and the widely-watched December German Ifo business climate index.

Oil prices weakened Friday, on course for a negative week, as surging cases of the Omicron Covid-19 variant raise concerns new restrictions may hit oil demand. 

Traders will look to the release of the Baker Hughes oil rig count and the CFTC positioning data later in the session to round the week off. 

By 2:05 AM ET, U.S. crude futures traded 0.9% lower at $71.70 a barrel, while the Brent contract fell 0.8% to $74.46. Brent is headed for a 1.2% loss this week, while the U.S. contract is poised to finish the week down 0.1%.

Additionally, gold futures rose 0.6% to $1,808.20/oz, while EUR/USD traded 0.1% higher at 1.1333.