European Stock Futures Higher; Resumption of Russian Gas Helps Mood Ahead of ECB
2022.07.21 09:37
By Peter Nurse
Investing.com – European stock markets are expected to open higher Thursday, helped by the resumption of Russian gas supply to the continent, but investors remain cautious ahead of a key European Central Bank meeting.
At 02:00 AM ET (0600 GMT), the DAX futures contract in Germany traded 1.1% higher, CAC 40 futures in France climbed 0.5%, and the FTSE 100 futures contract in the U.K. rose 0.4%.
European markets are set to open with a positive tone after Russia started earlier Thursday sending gas through its biggest pipeline to Europe after a 10-day maintenance period, according to a spokesperson for the pipeline operator Nord Stream.
Restoring flows to the levels requested will take some time, Nord Stream said, but the resumption is set to ease concerns about an energy crisis on the continent. The relief is likely to be largest in Germany with Europe’s largest economy heavily dependent on Russian gas for its power needs.
That said, gains are likely to be limited as investors await the European Central Bank meeting later in the session, which is widely expected to result in the central bank’s first interest-rate hike since 2011 later this week.
The ECB will also unveil its new anti-fragmentation tool, a bond-buying instrument designed to contain debt-market jitters as borrowing costs are lifted.
“This will be all the more interesting as the recent Italian political crisis has increased the chances of a sharp re-widening of Italian sovereign spreads,” said analysts at ING, in a note. “The details about the conditionality to access the anti-spread tool will be key and may drive part of the market’s reaction.”
The Bank of Japan left its accommodative monetary policy unchanged on Thursday, as widely expected.
In corporate news, French defense and technology group Thales (EPA:TCFP) raised its annual forecasts on the back of robust activity across all its segments in the first six months of the year.
Givaudan (SIX:GIVN) confirmed its mid-term targets after organic sales grew strongly in the first half of the year, with the Swiss fragrances maker helped by improving sales of perfumes as airport travel recovers.
SAP’s (ETR:SAPG) second-quarter revenue growth was helped by a boost from its cloud business, although the German business software group trimmed its profit outlook for the year due to the war in Ukraine.
ABB (SIX:ABBN) reported a sharp drop in profit during its second quarter as the Swiss engineering and technology company took hefty charges from its decision to quit Russia.
Oil prices fell Thursday for the second consecutive session after U.S. government data raised demand concerns at the world’s largest consumer during the peak summer driving season.
U.S. gasoline inventories rose 3.5 million barrels last week, according to Wednesday’s data from the U.S. Energy Information Administration, a much sharper increase than had been expected.
By 02:00 AM ET, U.S. crude futures traded 0.6% lower at $99.27 a barrel, while the Brent contract fell 0.5% to $106.44.
Additionally, gold futures fell 0.6% to $1,690.90/oz, while EUR/USD traded 0.4% higher at 1.0221.
