European Stocks Called Lower as Dollar Bears Brunt of U.S. Storm Costs

European stocks are expected to open lower Friday as a weak U.S. dollar lifts regional currencies and investors eye the impact of Hurricanes Harvey, Irma and Jose.
By Martin Baccardax ,

European stocks are expected to open lower Friday as ongoing weakness in the U.S. dollar keeps regional currencies elevated as investors count the economic impact of this historic Hurricane season on the world's biggest economy.

Britain's FTSE 100 is likely to drift around 0.15% at the start of trading, according to financial bookmakers IG, with similar percentage declines anticipated for markets in Germany and France as the euro rises to 1.2085 against the greenback, the highest level since January 2015.

The currency was boosted during European Central Bank President Mario Draghi's Thursday question-and-answer session with the media, where he said that while he remained confident inflation would "eventually" converge to the Bank's 'just below 2%' target amid a "robust and broad-based" Eurozone recovery, now was not the time to plot an exit from easy monetary policy.

The dollar index, which measures the greenback's strength against a basket of six global currencies, extended its 1.8% weekly decline Friday, drifting to 91.05 and the lowest level in 2.5 years as investors trimmed rate increase projections from the U.S. Federal Reserve in the wake of the economic damage of Hurricane Harvey and the pending wreckage expected from Hurricanes Irma and Jose, which are currently gathering speed as they barrel towards the South Florida coast.

Overnight in Asia, however, the dollar's decline didn't hold back equities, with stronger-than-expected China import data for the month of August helping to boost the regional MSCI Asia ex-Japan benchmark 0.23% higher into the start of European trading. Japan's Nikkei 225, however, was clipped by both a stronger yen and a significant markdown in the country's second quarter GDP estimate, which economists now saw grew 2.5% from a previously calculated 4%. The benchmark closed down 0.63% at 19,274.82 points.

Global oil prices extended gains, as well, with Brent crude, the global benchmark, hitting a 5.5 month high as traders bet that U.S. production will be slower to return to full capacity than first anticipated as a result of Harvey's damage in Texas and Louisiana and the impending impact of Irma. 

Brent futures contracts for November delivery were seen 0.35% higher from their Thursday close in New York at $54.68 per barrel while West Texas Intermediate crude for October contracts were marked 0.18% higher at $49.18

U.S. equity futures are suggesting a Friday pullback on Wall Street, as well, with the Dow Jones Industrial Average priced to fall 50 points, or 0.23%, at the opening bell and a 0.22% slip anticipated for the S&P 500. 

More of What's Trending on TheStreet:

Loading ...