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European Stock Futures Lower; Central Bankers in Spotlight

Stock Markets Jun 29, 2022 16:16
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By Peter Nurse - European stock markets are expected to open lower Wednesday as investors fret about the global economic outlook ahead of news from the European Central Bank’s annual retreat in Portugal.

At 02:00 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.5% lower, CAC 40 futures in France dropped 0.7%, and the FTSE 100 futures contract in the U.K. fell 0.6%.

Sentiment in Europe is weak Wednesday following the overnight losses on Wall Street, with the board-based S&P 500 index down more than 2% after data showed U.S. consumer confidence dropped to a 16-month low in June on fears high inflation could cause the economy to slow significantly in the second half of the year.

Inflation data from Spain and Germany are due later Thursday and are expected to confirm consumer prices at historic levels, feeding into Friday’s Eurozone CPI release which is expected to hit a fresh record high of 8.4% year-over-year as energy and food costs continue to soar. 

This rampant inflation has prompted the ECB to indicate it will hike interest rates in July, and also probably in September. With this in mind, the central bank’s annual retreat in Portugal will be in the spotlight, where President Christine Lagarde, along with Federal Reserve Chair Jerome Powell and Bank of England Governor Andrew Bailey will appear at a panel discussion later Wednesday. 

Investors will be looking to see what these central bankers say about the trade-off between curbing inflation while still trying to ensure a soft-landing for the global economy.

Also of interest will be news out of the NATO summit in Spain after Tuesday’s major announcement that Turkey has lifted its veto over Finland and Sweden's bid to join the Western alliance, ending a prolonged drama that tested allied unity against Russia's invasion of Ukraine.

Elsewhere, there was some positive news out of Asia after China announced an easing of its quarantine requirements for inbound passengers, in what could be seen as the biggest relaxation so far of its "zero COVID" strategy.

In corporate news, the retail sector is likely to be in the spotlight with earnings due from the likes of H&M (ST:HMb) and Mulberry (LON:MUL).

Oil prices slipped lower Wednesday, handing back some of the gains seen over the last three sessions as traders await news out of the OPEC+ meeting as the top crude producing countries gather ahead of Thursday’s formal meeting.

The Organization of Petroleum Exporting Countries and allies is widely expected to confirm another modest production increase scheduled for August, with limited room for a significant boost to output as very few members have the available space capacity.

On Tuesday the Group of Seven economic powers agreed to explore ways to cap the price of Russian oil, the latest move to try and limit Moscow's finances, while U.S. crude supply data from the industry body American Petroleum Institute showed a draw of 3.8 million barrels for the week ended June 24.

The official crude inventory data from the U.S. Energy Information Administration last week will be published later in Wednesday’s session, along with last week’s numbers which were delayed due to a system issue.

By 02:00 AM ET, U.S. crude futures traded 0.5% lower at $111.20 a barrel, while the Brent contract fell 0.6% to $113.16.

Additionally, gold futures traded largely flat at $1,821.05/oz, while EUR/USD traded 0.2% lower at 1.0501.

European Stock Futures Lower; Central Bankers in Spotlight

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