European stock futures mixed; German 1Q GDP disappoints

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European stock futures mixed; German 1Q GDP disappoints
Credit: © Reuters. - European stock markets are expected to trade in a mixed fashion at the open Thursday in cautious trading, with investors digesting German growth and consumer sentiment data as well as the ongoing U.S. debt ceiling negotiations.

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

Europe's data calendar is fairly light Thursday, but there are some important numbers coming out of Germany that investors will be focusing on.

The German first-quarter GDP release is the highlight, confirming that Europe’s largest economy contracted in the first three months of the year, with growth falling 0.3% on the quarter. 

This translated into a drop in growth of 0.2% when compared to the first quarter of last year.

The June GfK consumer sentiment index also showed that sentiment remained weak in the euro zone’s main growth driver, with the index only improving slightly to -24.2 in June from -25.7 the previous month.

Data released Wednesday showed that Germany’s business outlook deteriorated for the first time since October, with an expectations gauge by the Ifo institute slipping to 88.6 in May from 91.7 the previous month.

Yet, despite this negative outlook, the European Central Bank must lift borrowing costs further to return inflation to its target, Governing Council member Bostjan Vasle said in an interview with a Slovenian newspaper Thursday.

Vasle joins several other members of the ECB’s 26-strong Governing Council in calling for more hikes that could yet persist past the summer months.

Investors are also fretting about the slow progress in negotiations over raising the U.S. debt ceiling. 

Ratings agency Fitch flagged the possibility of a downgrade to the United States’ ‘AAA’ rating late Wednesday, saying while it still expected lawmakers to reach a deal before the early-June deadline, the ongoing uncertainty had brought up risks of a potential U.S. default. 

Corporate earnings are scheduled from the likes of food giant Tate & Lyle (LON: TATE ), specialty chemicals company Johnson Matthey (LON: JMAT ) and water supply firm United Utilities (LON: UU ), while the chipmaking sector is likely to be in focus after a robust outlook from Nvidia (NASDAQ: NVDA ).

Oil prices edged lower Thursday, retreating from three-week highs amid growing pressure from a strong dollar as uncertainty surrounding the U.S. debt ceiling negotiations mounted.

The U.S. currency climbed to a two-month high overnight on expectations that U.S. rates will remain higher for longer, making crude more expensive for international buyers, stifling demand. 

By 02:00 ET, U.S. crude futures traded 0.5% lower at $73.94 a barrel, while the Brent contract dropped 0.4% to $78.06. 

Both benchmarks rallied nearly 2% on Wednesday after official data showed U.S. crude inventories sank by more than expected in the past week.

Additionally, gold futures fell 0.5% to $1,955.60/oz, while EUR/USD traded 0.2% lower at 1.0732.

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