European Stocks Lower; Caution Ahead of Key U.S. Inflation Data

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European Stocks Lower; Caution Ahead of Key U.S. Inflation Data
Credit: © Reuters.

By Peter Nurse 

Investing.com - European stock markets edged lower Monday, with investors wary at the start of a week that includes the release of key U.S. inflation data and comments from Federal Reserve Chairman Jerome Powell.

At 4:20 AM ET (0920 GMT), the DAX in Germany traded 0.2% lower, the CAC 40 in France dropped 0.2% and the U.K.’s FTSE 100 fell 0.1%.

European stock markets are trading against a backdrop of a rapid spread of the Omicron variant of the Covid-19 virus over the holiday period, although in the U.K., the first country in the region to record a surge in Omicron cases, the wave of infections appears to have peaked in London without overwhelming the healthcare system.

In corporate news, Credit Suisse (SIX: CSGN ) stock climbed 1.7% after a report by a Swiss financial website Inside Paradeplatz suggested that the beleaguered Swiss bank may be looking for a buyer. UniCredit (MI: CRDI ) and BNP Paribas (PA: BNPP ) were touted as potential buyers, but there is no confimation from either.

The banking sector as a whole could be in focus this week, with several large U.S. banks, including JPMorgan Chase (NYSE: JPM ), Citigroup (NYSE: C ) and Wells Fargo (NYSE: WFC ), set to release fourth-quarter earnings on Friday. 

Elsewhere, French business software group Atos fell 18% to a 10-year low after issuing a profit warning, while Idorsia (SIX: IDIA ) stock rose 4% after the Swiss drugmaker said it has received U.S. Food and Drug Administration approval for its treatment for insomnia in adult patients.

U.K. homebuilders suffered from news that they will have to pay more to remove dangerous cladding from multi-storey houses. Taylor Wimpey (LON: TW ), Persimmon (LON: PSN ), Barratt and Berkeley group all saw their stock fall by between 2.3% and 3%, putting them at the bottom of the FTSE 100.

Global stock markets will be focusing squarely on the latest U.S. inflation data this week, with strong numbers potentially cementing an early rate hike from the Federal Reserve.

The consumer price inflation data, on Wednesday, is expected to show headline CPI breaking above 7% year-on-year, approaching a four-decade high, while producer price inflation data the following day is also expected to show a surge higher.

The Fed is expected to lift interest rates well before its Eurozone counterpart, with influential investment bank Goldman Sachs (NYSE: GS ) now seeing the U.S. central bank raising interest rates four times this year. Even so, annual inflation in the Eurozone hit 5.0% last week, a new record high, raising the pressure on the European Central Bank to tighten its own monetary policy.

Oil prices stabilized Monday after the sharp gains of the previous week, as operator Chevron said Sunday that Kazakhstan's largest oil venture, Tengizchevroil, is gradually returning to normal production levels after recent protests limited output.

Supply outages in places like Kazakhstan and Libya have thrown the spotlight on global supply, superseding concerns that the spread of the Omicron coronavirus variant might hurt demand.

By 4:20 AM ET, U.S. crude futures traded 0.5% higher at $79.31 a barrel, while the Brent contract rose 0.5% to $82.15. Both contracts posted gains of around 5% in the first week of the year.

Additionally, gold futures fell 0.1% to $1,797.00/oz, while EUR/USD traded 0.2% lower at 1.1339.

 

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