European Stock Futures Edge Lower; Fed Minutes Prompt Caution

  • Stock Market News
European Stock Futures Edge Lower; Fed Minutes Prompt Caution
Credit: © Reuters.

By Peter Nurse - European stock markets are expected to open marginally lower Thursday, with investors reacting cautiously as the minutes from the Federal Reserve's last meeting pointed to further aggressive tightening ahead.

At 2 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.3% lower, CAC 40 futures in France traded 0.1% lower, and the FTSE 100 futures contract in the U.K. fell 0.3%.

The minutes from the Fed's May 3-4 meeting, released on Wednesday, showed that all policymakers supported the central bank’s rate increase of 50 basis points, the first of that size in more than 20 years.

Additionally, the minutes stated that "most participants" felt that further hikes of that size would "likely be appropriate" at the Fed's policy meetings in June and July.

Sentiment remains fragile within the European equity markets amid persistent concerns over global growth as a number of central banks seek to combat soaring inflation, exacerbated by the ongoing war in Ukraine, by tightening monetary policy.

European Central Bank President Christine Lagarde said this week that the ECB's negative deposit rate should start rising in July and could be at zero or "slightly above" by the end of September before rising further "towards the neutral rate".

The economic data slate is largely empty on Thursday, with Italian confidence data and industrial sales being the only notable entries. Eyes will turn later in the session to the U.S. and the release of quarterly GDP growth data as well as weekly jobless claims for signs the U.S. economy is starting to cool.

In corporate news, the tech sector is likely to be in focus after U.S. chip designer Nvidia (NASDAQ: NVDA ) forecast late Wednesday that its sales of video game chips would decline in the current quarter, citing supply-chain issues resulting from China's COVID-19 lockdowns.

Back in Europe, Auto Trader (LON: AUTOA ) and United Utilities (LON: UU ) are among companies scheduled to offer up earnings results.

Oil prices edged higher Thursday, helped by a bigger-than-expected drawdown in U.S. crude inventories last week of one million barrels, an illustration of a tight global market.

The market remains focused on whether the European Union can agree to an embargo on Russian oil in retaliation for the invasion of Ukraine. 

European Council President Charles Michel on Wednesday said he is confident that unanimous agreement can be reached before the council's next meeting on May 30, but Hungary remains a stumbling block.

By 2 AM ET, U.S. crude futures traded 0.4% higher at $110.77 a barrel, while the Brent contract rose 0.2% to $111.30. 

Additionally, gold futures fell 0.2% to $1,842.76/oz, while EUR/USD traded 0.1% lower at 1.0676.

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