European Stock Futures Flat; U.K. May GDP Rises, U.S. CPI in Focus

  • Stock Market News
European Stock Futures Flat; U.K. May GDP Rises, U.S. CPI in Focus

By Peter Nurse - European stock markets are expected to open largely unchanged Wednesday, as investors warily await the release of the latest U.S. inflation report which could guide future Federal Reserve policy.

At 02:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.1% higher, CAC 40 futures in France climbed 0.1%, and the FTSE 100 futures contract in the U.K. traded flat.

Investors have been on edge this week, with stock market moves largely insubstantial, as they prepare for the release of the June consumer price index out of the U.S. later Wednesday.

This is expected to show annual headline inflation, including food and energy, rising above May’s 8.6% level to 8.8%, a 40-year peak.

Such an elevated figure is likely to persuade the U.S. central bank of the need to continue with aggressive interest rate rises , on top of the hike of 75 basis points at its last meeting , even if this runs the risk of pushing the U.S. economy, the main global growth driver, into recession.

Back in Europe, inflation data from the likes of Germany , Spain and France are also due Wednesday, and should show consumer prices still at elevated levels in the Eurozone.

The European Central Bank has pledged to raise interest rates at its next meeting later in July, but sentiment in the region is very weak amid fears of a worsening of the region’s energy crisis as the biggest pipeline carrying Russian gas to Germany has started 10 days of annual maintenance.

The German forward-looking Economic Sentiment indicator compiled by the think-tank ZEW fell Tuesday to the lowest level in eleven years in July as the country faced the prospect of a winter of gas rationing. 

On a more positive note, U.K. GDP rose 0.5% on the month in May, the first growth in three months, and much better than the 0.1% growth expected.

In corporate news, Credit Suisse (SIX: CSGN ) will be in the spotlight after the Swiss lender postponed the initial public offering of its 1a Immo PK real estate fund, citing current market turbulence.

Oil prices traded largely flat Wednesday as traders warily awaited the U.S. inflation data which could prompt further U.S. rate hikes, weakening global activity.

U.S. crude stocks rose by about 4.8 million barrels for the week ended July 8, according to Tuesday’s data from the industry body American Petroleum Institute , exacerbating fears of a wobble in oil demand.

The official government inventory report is due later Wednesday.

By 02:05 AM ET, U.S. crude futures traded unchanged at $95.84 a barrel, while the Brent contract was flat at $99.50. Both contracts fell by more than 7% on Tuesday, falling through $100 a barrel for the first time since April.

Additionally, gold futures fell 0.1% to $1,722.75/oz, while EUR/USD traded marginally higher at 1.0039.

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