Investing.com - European stock markets are expected to open largely unchanged Thursday, with investors cautious ahead of a Bank of England rate decision, key inflation and services activity data and a plethora of corporate earnings, including tech giant Apple.
At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 0.2% lower, CAC 40 futures in France dropped 0.2%, while the FTSE 100 futures contract in the U.K. rose 0.1%.
Bank of England set to hike once more
Global risk sentiment was hit hard Wednesday by the decision of rating agency Fitch to downgrade the United States’s credit rating, with the main European stock indices all closing over 1% lower.
Worries about the debt piles that governments around the world have accumulated remain, but attention Thursday is turning towards the Bank of England as it holds its latest policy-setting meeting later in the session.
This central bank is expected to hike once more by 25 basis points to 5.25%, and not the 50 bps of last month, after inflation fell to 7.9% in June, easing off 8.7% in May.
This is still substantially above the BOE’s 2% medium-term target, and investors will be keen to study the bank’s growth and inflation forecasts for indications of just how sticky inflation has become, and thus how long this tightening cycle will last.
European services PMI data due
There is also an abundance of economic data due for release later Thursday, and the market received some good news after China started the day by releasing better-than-expected services activity, a boost after Monday’s weak manufacturing activity numbers.
China's service sector purchasing managers index came in at 54.1, a slight increase from the 53.9 seen in June, and above the 50 level which denotes expansion.
The equivalent data is due throughout Europe, and is expected to confirm an expanding sector, as the services sector attempts to make up for manufacturing weakness.
Trade data from Germany and France are also due, while the eurozone PPI release for June should confirm inflation is on the retreat.
Apple dominates the earnings slate
Apple (NASDAQ:AAPL), the world’s largest company by market capitalization, is set to announce earnings later in the session, and investors will be listening for any details on new product launches as well as any signs it will enter the much-hyped AI world.
Back in Europe, BMW (ETR:BMWG) lifted its full-year guidance after the auto giant reported a strong first half of the year, while Germany's Merck KGaA (ETR:MRCG) warned of a steeper earnings decline on a slump in demand for materials used to produce pharmaceuticals and semiconductors.
Adidas AG (ETR:ADSGN) sales fell 5% in the second quarter but a release of Yeezy shoes helped its profit margin increase, narrowing a projected loss, the company said on Thursday, confirming figures released last week.
Societe Generale SA (EPA:SOGN), France's third-biggest listed bank, reported better-than-expected quarterly earnings, as cost management and a strong growth of its car leasing division alleviated a steep fall in margins at its retail branch.
Crude edges higher after record U.S. inventories draw
Oil prices edged higher Thursday, with a record drop in U.S. inventories helping sentiment recover after the previous session’s selloff on the U.S. government's credit downgrade.
Official data, released Wednesday, showed that U.S. crude inventories shrank by over 17 million barrels in the week to July 28. This was the biggest drop recorded in data stretching back to 1982, and indicated a substantial tightening in crude markets.
By 02:00 ET, the U.S. crude futures traded 0.1% higher at $79.59 a barrel, while the Brent contract climbed 0.1% to $83.32.
Both benchmarks closed down 2% on Wednesday.
Additionally, gold futures rose 0.2% to $1,970.60/oz, while EUR/USD traded 0.1% higher at 1.0939.