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European stock futures flat ahead of key U.S. inflation data

Published 12-04-2023, 11:46 am
© Reuters.

By Peter Nurse

Investing.com - European stock markets are expected to open largely unchanged Wednesday amid nervous caution ahead of the monthly U.S. inflation report, which could guide future Federal Reserve monetary policy.

At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 0.1% higher, while CAC 40 futures in France and the FTSE 100 futures contract in the U.K. traded largely flat.

European equities posted small gains on Tuesday as they returned from the long Easter weekend, but sentiment remains guarded as investors await the release of the U.S. CPI index for March to gauge just how sticky prices are likely to be and thus the likely response from the Federal Reserve.

The general perception is that the Fed is near the end of its aggressive rate-hiking cycle, but there may still be room for another increase in May, when the policymakers next get together.

Philadelphia Federal Reserve Bank President Patrick Harker made this point on Tuesday, saying that he feels the Fed may soon be done raising interest rates while reiterating that the central bank is committed to bringing inflation down from its elevated levels.

There’s little in the way of major economic data due in Europe Wednesday, and thus stock markets are likely to trade in something of a holding pattern ahead of the U.S. inflation report.

This is expected to show the all-important core inflation, which excludes volatile food and energy prices, rose 0.4% on a monthly basis and 5.6% year-over-year in March.

On the corporate side, French luxury goods group LVMH Moët Hennessy Louis Vuitton (EPA:LVMH) is expected to release a sales update later Wednesday that could provide clues as to how demand from the vital market of China is responding to the lifting of COVID-19 late last year.

Oil prices steadied Wednesday ahead of the release of the all-important U.S. inflation data as well as the U.S. government crude inventories.

Dollar weakness helped the crude benchmarks post gains of around 2% on Tuesday, even after the American Petroleum Institute, an industry body, reported crude stockpiles rose by about 380,000 barrels last week, against expectations for a small decline.

The U.S. government will release its stockpile data later this session.

By 02:00 ET, U.S. crude futures traded 0.2% higher at $81.67 a barrel, while the Brent contract also climbed 0.2% to $85.79.

Additionally, gold futures rose 0.7% to $2032.90/oz, while EUR/USD traded 0.2% higher at 1.0928.

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