European Stock Futures Higher; Key U.S. Inflation Data in Focus

  • Stock Market News
European Stock Futures Higher; Key U.S. Inflation Data in Focus

By Peter Nurse - European stock markets are expected to open higher Wednesday, rebounding after the recent broad selloff ahead of the release of key U.S. inflation data which could influence how aggressively the Federal Reserve raises interest rates.

At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.2% higher, CAC 40 futures in France climbed 0.7%, and the FTSE 100 futures contract in the U.K. rose 0.4%.

European equities, following the lead from Wall Street, have struggled of late, with the pan-European STOXX 600 index falling to two-month lows on concerns that soaring inflation will prompt central banks and the Fed, in particular, to boldly hike interest rates, increasing the potential for a global recession.

The U.S. central bank raised interest rates  by 50 basis points last week and pointed to a series of cuts of this size in the months ahead. However, there has also been speculation that the Fed will need to go in for a massive 75 basis point hike at one meeting to combat inflation at levels not seen for 40 years.

With this in mind, the release of the U.S. consumer price index for April, at 8:30 AM ET (1230 GMT), will be the day’s main event. The index is expected to have fallen to 8.1% on the year from 8.5% the previous month.

Earlier Wednesday, China’s factory and consumer prices accelerated faster than expected in April, as COVID lockdowns disrupted supply chains. The consumer price index rose 2.1% year-on-year, while the producer price index rose 8% year-on-year.

German CPI also climbed 7.4% on the year in April, up from 7.3%, and a rise of 0.8% on the month, compared with a gain of 2.5% in March.

In corporate news, tobacco giant Philip Morris (NYSE: PM ) confirmed it was making a recommended cash offer to buy Swedish tobacco and nicotine products maker Swedish Match (ST: SWMA ), valuing the Stockholm-listed company at approximately $16 billion.

German industrial conglomerate Thyssenkrupp (ETR: TKAG ) will also be in focus after it beat second quarter earnings expectations and raised its guidance, while results from the likes of Alstom (EPA: ALSO ), Commerzbank (ETR: CBKG ), Continental (ETR: CONG ), E.ON (ETR: EONGn ) and Siemens Energy (ETR: ENR1n ) will also be studied.

Oil prices bounced Wednesday, after slumping around 9% over the previous two sessions, with the market caught in a dynamic between the destruction of Chinese demand, given the country’s ongoing COVID lockdowns and the restriction of Russian supply.

The American Petroleum Institute reported U.S. crude stockpiles rose by 1.62 million barrels last week, and traders will be looking to see if government data, due later in the session, confirms this.

By 2:05 AM ET, U.S. crude futures traded 2.4% higher at $102.14 a barrel, while the Brent contract rose 2.5% to $104.98.

Additionally, gold futures fell 0.2% to $1,837.04/oz, while EUR/USD traded 0.2% higher at 1.0546.

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