European stocks were set for a lower opening, reflecting a downward trend that also affected Asian equities, as concerns over China’s economic performance and diminished expectations for U.S. rate cuts dampened investor sentiment.

The Euro Stoxx 50 futures dropped, mirroring losses in U.S. stocks on Thursday and a lackluster performance in Asian markets, which saw regional shares decline for the first time in nearly a week. These market movements came amid a subdued trading day on Wall Street, compounded by alarming economic indicators from China, where home sales decreased sharply in April, surpassing the decline observed in the previous month, and consumer spending unexpectedly fell, signaling further economic troubles.

Market analysts noted a significant drop in investor confidence in Chinese A-shares, attributing the sentiment to disappointing credit and inflation figures, alongside the impact of new U.S. tariffs. This renewed concerns about the macroeconomic environment and ongoing geopolitical tensions.

In the equities market, stocks in mainland China, Australia, and South Korea experienced losses, whereas Japanese and Hong Kong stocks saw modest gains. The Hang Seng Index hovered near a nine-month peak, bolstered by strong financial performances from Alibaba Group Holding Ltd. and Baidu Inc. Meanwhile, U.S. equity futures remained relatively stagnant following slight declines in the S&P 500 and Nasdaq 100.

Upcoming consumer price index data from the Eurozone is projected to show a 2.4% rise in prices for April, consistent with the previous month. Additionally, several European Central Bank officials are scheduled to speak at a finance event in Portorož, Slovenia.

The Japanese yen weakened against the dollar following the Bank of Japan’s decision to maintain its bond buying levels. A former chief economist at the BOJ hinted that the central bank might increase interest rates up to three more times within the year, with the potential for an early move in June.

In bond markets, U.S. Treasuries saw little change, while yields in Australia and New Zealand moved higher, aligning with U.S. bond trends from the previous day. The dollar strengthened, while the offshore Chinese yuan depreciated against it.

In a significant policy shift, China has eliminated the floor on mortgage rates and reduced the minimum down payment requirements for homebuyers, aiming to rejuvenate its struggling property sector.

Analysts have voiced concerns that Beijing might settle for superficially acceptable GDP growth while ignoring weaker nominal growth and the tougher economic conditions affecting businesses and households. This year’s economic recovery in China faces what is termed ‘complacency risk.’

Market caution is evident as traders adjust their expectations for Federal Reserve rate cuts, scaling back from two anticipated cuts in 2024 to just one, based on the latest consumer price index data and market reactions.

Amidst these broader economic discussions, three Fed officials emphasized the need to maintain high interest rates longer, as they seek more definitive signs that inflation is trending towards the 2% target.

In commodity markets, West Texas Intermediate oil prices were on the rise, marking a third consecutive day of increases. Gold prices remained stable after a decline the previous day, and Bitcoin sustained a value over $65,000 after stopping a recent downturn.