European Shares Set To Open On Firm Note As AI Fears Ease

(RTTNews) - European stocks may open higher on Friday, with underlying sentiment likely to be underpinned by a tech-led rally on Wall Street overnight after software giant Microsoft delivered a strong earnings report and reassured investors that its hefty AI spending was translating into robust demand.

U.S. stock futures ticked higher after Apple and Amazon both reported higher second-quarter revenues, beating Wall Street expectations.

In economic releases, CPI inflation data from France and the Eurozone, German unemployment figures, and U.K. house price data may garner investor attention as the session progresses.

Asian markets were broadly higher, with key benchmark indexes in South Korea and Japan surging 16 percent and 4 percent, respectively as investors returned to AI stocks.

An official survey showed China's manufacturing activity unexpectedly slipped into contraction in July after five months of expansion, adding to signs of strain in the wider economy.

The dollar gained some positive traction as the yen sank following the Bank of Japan's decision to keep rates on hold.

The 30-year U.S. Treasury yield hovered near 19-year highs while short-end yields eased, steepening the curve amid growing doubts over the Federal Reserve's ability to keep inflation in check.

Gold edged down to $4,080 an ounce but headed for its first monthly gain in five months. Brent crude futures eased below $86 a barrel but were still on track to gain more than 20 percent for the month.

A drone strike on gas vessels at Egypt's Damietta port has intensified fears of the U.S.-Iran conflict widening across the Middle East, drawing more countries into the roughly five-month-old war and posing threats to navigation through the Suez Canal, one of the last remaining export routes for Saudi oil.

Iran's Islami Revolutionary Guard Corps (IRGC) destroyed two drone hangars, along with a fuel storage facility at the U.S.-operated Ali Al Salem airbase in Kuwait and said that Tehran's military actions would persist until the complete eviction of U.S. "occupying and looting forces" from the region.

U.S. stocks rose sharply overnight following a sharp decline in the previous session after the Fed's interest-rate decision.

The tech-heavy Nasdaq Composite soared 2.8 percent as Microsoft's robust earnings helped ease concerns around tech companies' massive AI infrastructure investments. The S&P 500 rallied 1.7 percent and the Dow climbed 1.2 percent.

On the economic front, data showed U.S. economic growth slowed to 1.5 percent in the second quarter as the trade deficit widened.

Headline annual PCE inflation, closely tracked by the Federal Reserve, cooled in June but remained well above the central bank's target.

Jobless claims increased less than expected last week, suggesting stable labor market conditions.

European stocks closed higher on Thursday after a wave of solid corporate earnings.

The pan-European STOXX 600 advanced 0.8 percent. The German DAX rose 0.6 percent and France's CAC 40 surged 0.9 percent while the U.K.'s FTSE 100 slipped 0.1 percent after the Bank of England held interest rates steady but indicated it could raise them if the Iran war escalates.