European stock futures lower; central bank meetings, corporate earnings in focus

  • Stock Market News
European stock futures lower; central bank meetings, corporate earnings in focus
Credit: © Reuters. - European stock markets are expected to open lower Monday, as investors nervously await the outcomes of central bank meetings, from the Federal Reserve, the Bank of Japan and the European Central Bank, as well as more quarterly corporate earnings.

At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 0.4% lower, CAC 40 futures in France dropped 0.4% and the FTSE 100 futures contract in the U.K. fell 0.5%.

Fed, ECB set to hike again

The Federal Reserve starts the ball rolling on Wednesday, followed by the European Central Bank on Thursday, and both senior central banks are widely expected to increase interest rates by another 25 basis points.

These decisions have been firmly signaled, and so the focus will be on what Fed Chair Jerome Powell and ECB President Christine Lagarde say about the rate outlook.

As things currently stand, the markets expect this to be the last hike from the Fed and second-to-last from the ECB, as the aggressive synchronized global tightening campaign to combat soaring inflation nears its end.

The situation is different in Japan, with the country’s central bank expected to stand pat on Friday, but Japan's core inflation stayed above the 2% target in June for the 15th straight month suggesting the BoJ could upgrade this year's inflation forecast.

European PMI data due

Investors will study July manufacturing and services activity for the eurozone during the session, with the dominant German manufacturing sector expected to show some improvement while remaining in contraction territory.

Data released earlier Monday showed that manufacturing activity in Japan extended declines in July while growth in the service sector slowed.

Staying in Asia, China's next politburo meeting is expected for Friday, and this could result in additional stimulus as Beijing attempts to support the world’s second-largest economy as it struggles to recover from its COVID hit.

Philips lifts full-year targets

The quarterly earnings season is now in full pace, and a lot of attention will be focused on the U.S. tech sector, with the likes of Microsoft (NASDAQ: MSFT ) and Alphabet (NASDAQ: GOOGL ) set to report on Tuesday.

Back in Europe, Dutch health technology company Philips (AS: PHG ) slightly raised its full-year targets earlier Monday after posting a bigger-than-expected jump in second-quarter core earnings.

Ryanair (IR: RYA ), Europe's largest airline by passenger numbers, posted quarterly profit above pre-pandemic levels, but lowered its passenger growth forecast for 2023 because of Boeing (NYSE: BA ) delivery delays.

Swiss private bank Julius Baer (SIX: BAER ) reported an 18% increase in net profit for the first half of 2023, while the Financial Times reported that Adidas (ETR: ADSGN ) has received orders worth around $565 million for the first batch of online sales of its unsold inventory of Yeezy shoes.

Oil prices consolidate after recent gains

Oil prices slipped lower Monday, consolidating after recent gains ahead of this week’s rate-setting meetings from U.S. and European central banks.

By 02:00 ET, the U.S. crude futures traded 0.3% lower at $76.86 a barrel, while the Brent contract dropped 0.3% to $80.64. 

The benchmarks rose 1.5% and 2.2% respectively last week, their fourth consecutive positive week, as the prospect of tighter supplies–additional production cuts by Saudi Arabia and Russia are set to start in August–resulted in prices climbing to their highest levels in nearly three months.

Additionally, gold futures fell 0.2% to $1,961.80/oz, while EUR/USD traded 0.1% higher at 1.1131.

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