By Peter Nurse 

- European stock markets are expected to open lower Friday, with sentiment hit by the broad sell-off on Wall Street overnight amid fears that aggressive central bank tightening will be needed to tame soaring inflation, severely hitting economic growth.

At 2 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.3% lower, CAC 40 futures in France dropped 0.2% and the FTSE 100 futures contract in the U.K. fell 0.2%.

All three main Wall Street benchmarks closed sharply lower Thursday, with the blue chip Dow Jones Industrial Average falling more than 1,000 points, or 3.1%, its worst daily performance since October 2020.

The tech-heavy Nasdaq Composite fell 5%, its biggest one-day percentage decline since June 2020 and its lowest finish since November 2020.

The Federal Reserve raised the benchmark interest rate by a half-point on Wednesday, its biggest hike in two decades, but fears are mounting that larger hikes will be needed to combat inflation running at levels not seen in four decades.

The Bank of England lifted its benchmark rate on Thursday to the highest level since 2009 while warning that Britain could see inflation at 10%, and the head of Germany's Ifo institute said Friday that the European Central Bank must quickly raise interest rates to combat high inflation in the Eurozone.

Worries are also mounting about the economy in China, the world’s second-largest economy and regional growth driver, as the country’s decision-makers appeared to double down on its zero-COVID policy, a strategy that is seen upsetting global supply chains and hitting growth.  

Back in Europe, German industrial production fell a massive 3.9% on the month in March, from a rise of 0.2% the previous month, illustrating the economic difficulties the Eurozone’s largest economy is suffering.

However, the major economic release Friday comes from the U.S., with the monthly official jobs report likely to be studied carefully for clues on labor market strength and the likely impact on monetary policy.

In corporate news, ING (AS:INGA), the largest Dutch bank, reported a disappointing first-quarter profit, with its earnings hit by hefty provisions at its wholesale banking division.

Earnings from the likes of Adidas (H:ADSGn) and British Airways parent IAG (LON:ICAG) are also scheduled before the open.

Oil prices edged higher Friday, climbing for the third straight session, on persistent concerns over the tightness of global supply, particularly with the European Union, the world's largest trading bloc, set to phase out imports of Russian oil.

The Organization of the Petroleum Exporting Countries and allied producers, a group known as OPEC+, agreed on Thursday to raise June production by a modest 432,000 barrels per day, ignoring calls from consuming nations to increase output more to lower prices.

By 2 AM ET, U.S. crude futures traded 0.4% higher at $108.72 a barrel, while the Brent contract rose 0.4% to $111.37. Both benchmarks are on track to rise for a second week in a row.

Additionally, gold futures fell 0.1% to $1,874.35/oz, while EUR/USD traded 0.2% lower at 1.0522.