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European stocks mixed; global inflation data in focus

Published 28/05/2024, 05:20 pm
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Investing.com - European stock markets traded in a mixed fashion Tuesday, with U.K. markets returning from a break, as investors awaited key inflation data on both sides of the Atlantic for clues over future monetary policy.

At 03:10 ET (07:10 GMT), the DAX index in Germany traded 0.2% higher, while the CAC 40 in France fell 0.1% and the FTSE 100 in the U.K. dropped 0.1%.

Key inflation data in focus 

The FTSE 100 is underperforming Tuesday after U.K. markets returned from Monday's late May bank holiday, but sentiment is generally positive after dovish comments from a series of ECB officials.

The European Central Bank has plenty of room for rate cuts and current market expectations for easing over the long-run are reasonable, ECB policymaker Francois Villeroy de Galhau said in a newspaper interview on Monday.

The ECB has virtually guaranteed an interest rate cut in June, but uncertainty over what follows remains.

The central bank will cut interest rates at a slower or faster pace depending on the strength of underlying inflation and demand, ECB chief economist Philip Lane said on Monday.

With this in mind, the latest eurozone inflation release is due on Friday, and is expected to tick up 2.5% in May year-on-year, from 2.4% in April, while underlying inflation is seen holding steady at 2.7%.

Across the pond, the Fed’s favourite inflation gauge - the personal consumption expenditures price index - is also due on Friday, and will be closely watched for clues about the direction of interest rates over the rest of the year.

Investors will also get the chance to hear from several Fed speakers during the week including Governor Michelle Bowman, Cleveland Fed President Loretta Mester, Governor Lisa Cook, New York Fed President John Williams and Atlanta Fed President Raphael Bostic.

Flows into Europe pick up

The corporate earnings season is largely at a close Tuesday, with little in the way of results scheduled.

There has been an uptick of flows into European equities in recent weeks, analysts at Goldman Sachs (NYSE:GS) said, in a note. 

Europe has been the least-favoured region in recent years for long-only flows, with cumulative net inflows being close to zero since 2020. 

“We think there is room for flows to pick up,” Goldman added.

Crude rebounds ahead of OPEC+ meeting 

Crude prices edged higher Tuesday, rebounding from recent losses ahead of a meeting by major producers to decide future levels. 

By 03:10 ET, the U.S. crude futures (WTI) traded 0.2% higher at $78.70 per barrel, while the Brent contract traded largely unchanged at $82.85 per barrel.

Oil prices rose over 1% on Monday in muted trade owing to public holidays in the U.K. and the U.S., after sinking to the lowest levels since early-February last week.  

All eyes are now on the next meeting of the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, which is set to take place online on June 2.

Focus will be squarely on whether the cartel will extend its current voluntary output cuts of 2.2 million barrels per day into the second half of the year.

Additionally, gold futures fell 0.4% to $2,344.25/oz, while EUR/USD traded 0.2% higher at 1.0875.

 

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