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UK WRAPS UP A GLOOMY WEEK, BUT FTSE 100 OUTPERFORMS (1032 GMT)
A grey and rainy sky in London was in fitting with a gloomy mood in the UK this week, which wraps up with Britons facing a spate of tax increases and austerity arising from the government's fiscal statement on Thursday, and this week's data only added to the dreariness.
Unemployment numbers on Tuesday suggested cracks might be appearing in the labour market, consumer price data on Wednesday showed inflation soaring to a 41-year high and the latest data on Friday showed British retail sales staging only a partial rebound last month.
But there hasn't been much of a hit to UK equities.
The FTSE 100 is up 1.3% this week, outperforming the STOXX 600 which is adding 0.1% on the week. Meanwhile the domestically-focused FTSE 250 is down 2%, suffering its worst weekly drop since Truss's mini-budget in late September.
For Frédérique Carrier, head of investment strategy in the British Isles and Asia at RBC Wealth Management, there are still "attractive opportunities" in UK equities, even though she stays underweight on them as part of a global portfolio.
"We maintain our strong bias for internationally oriented companies. The valuation multiples of many leading UK-listed multinationals are now significantly lower than peers listed in other markets," said Carrier in a note.
Another benefit is a chunky dividend, with Carrier pointing out the FTSE All-Share Index has the highest dividend yield among the major regional equity markets, at more than 4%, comfortably above the yield on a UK 5-year government bond, at 3.3%.
An international slant and the energy sector stand out as attractively valued in UK stocks, according to Carrier, but domestically-focused stocks invite hesitation - unsurprising given UK disposable incomes look set to fall by 4.3% in the current financial year and by 2.8% in 2023/24.
"We would continue to be selective towards domestically focused UK stocks given our cautious stance on consumer spending," she writes.
STOXX UP 0.8%, STILL SET FOR WEEKLY LOSS (0907 GMT)
Europe's STOXX 600 is pushing higher in a relatively quiet start on Friday.
The pan-European benchmark is up 0.8% but is still set for its first weekly drop in five after trimming 1.4% on Wednesday and Thursday, its biggest two-day drop since Oct. 10.
Germany's DAX is rising 0.9%, France's CAC 40 is up 1% and Britain's FTSE 100 is up 0.6%.
Austria's Verbund tops the STOXX 600 after Austria announced a windfall tax on energy companies but said it can be reduced if firms make green investments. Verbund generates around 90% of its power via its network of hydroelectric plants.
The energy sector leads the way higher for Europe, helped by the rally in Verbund shares, while the tech sector is lagging.
Here's your opening snapshot:
STOCK FUTURES SIGNAL STRONG START (0739 GMT)
European stock futures are pointing to a higher open on Friday after two down days for the STOXX 600, its biggest two-day drop since mid-October.
Futures on the euro STOXX 50 are up 0.6%. Futures on Germany's DAX, Britain's FTSE 100 and France's CAC 40 are 0.2%-0.6% higher.
It's another busy slate of central bank speakers as markets assess whether a pivot is around the corner or whether central banks will stay steadfast in their approach to fighting inflation.
The speaker list today includes ECB President Lagarde plus Knot and Nagel from the governing council, the Fed's Susan Collins and the BoE's Haskel and Mann.
Meanwhile, focus will be on euro zone banks as the ECB is set to publish the amounts of the first voluntary repayment of outstanding loans under their targeted long-term refinancing operations (TLTRO), following changes announced at the October policy meeting. The announcement is scheduled at 1105 GMT.
TOUGH FED TALK (0656 GMT)
While Fed speakers talk tough on interest rates and keep market expectations in check, Britain's bleak outlook will also weigh on UK assets.
St. Louis Fed President James Bullard said that even under a "generous" analysis of monetary policy, the Fed needs to keep raising interest rates given that its tightening so far "had only limited effects on observed inflation."
And Minneapolis Federal Reserve Bank President Neel Kashkari said it's hard to know how high the U.S. central bank will need to raise interest rates but it should not stop until it's clear that inflation has peaked.
For now, it does look like recent market enthusiasm about a short period of rising rates on signs of slower inflation was misplaced. On Friday, the change in mood pushed the dollar on course for its best week in a month, while Asian stocks were stable.
However, there was some good news as British consumer confidence edged up this month though it stayed close to record-low levels, market research firm GfK said on Friday.
This came a day after the country's budget forecasters warned Britain faced a record hit to living standards this year, battered by surging inflation. Finance minister Jeremy Hunt also announced more pain, with tax rises now and spending cuts further ahead.
On the corporate front, Francesco De Ferrari, who heads Credit Suisse's wealth management business, told Reuters he is targeting growth markets, high net worth clients and technology to fuel the fortunes of the embattled Swiss bank.
Meanwhile, John Ray, who was named FTX's CEO to steer FTX Group through bankruptcy, outlined fund abuses and untrustworthy records in his first findings at the collapse crypto exchange, describing it as a "complete failure" of controls.
The Securities Commission of The Bahamas assumed control of all digital assets of FTX. The morale was downbeat at Twitter as hundreds of employees started leaving the beleaguered social media company following an ultimatum from Elon Musk that staffers sign up for "long hours at high intensity," or leave.
Finally, be prepared for delays in the holiday season.
Postal workers at Britain's Royal Mail will strike for six days in the run-up to the busy Christmas period in a dispute over pay and conditions, their union said on Thursday.
Key developments that could influence markets on Friday:
UK Oct retail sales
U.S. Oct existing home sales
Fed's Powell speaks