European stock futures lower; hawkish Fed minutes weigh

Investing.com – European stock markets are expected to open lower Thursday, with risk sentiment hit by the release of hawkish minutes of the Federal Reserve’s June meeting as well as weak economic signals.

At 02:00 ET (06:00 GMT), the contract in Germany traded 0.6% lower, in France dropped 0.7% and the contract in the U.K. fell 0.5%.

Hawkish Fed minutes weigh

Most Asian stocks fell overnight, following on from losses on Wall Street, and Europe is set to follow suit after the from the last Fed meeting showed that nearly all of its members supported more rate hikes in the coming months.

“Almost all participants noted that in their economic projections that they judged that additional increases in the target federal funds rate during 2023 would be appropriate,” the Fed minutes showed.

Additionally, there were some policymakers who were in favor of a rate hike at the June meeting, when the U.S. central bank paused its year-long tightening cycle, amid concerns about the strength in the labor market and “unacceptably high” elevated inflation. 

Concerns that prolonged rate hikes will push the U.S. economy into recession have weighed heavily on most developed stock markets given the importance of the largest economy in the world as a global growth driver.

European economic concerns mounting

Back in Europe, economic worries are already growing after data released Wednesday showed that eurozone business activity slipped into contractionary territory last month.

The final , widely seen as a good gauge of overall economic health, slumped to 49.9 in June from May’s 52.8.

There was some good news Thursday, as rose 6.4% on the month in May, much better than expected and also an improvement on the fall of 0.4% the prior month, while the and are scheduled to release June construction PMI data later in the session.

Yellen visits China

Elsewhere, investors will also likely monitor the visit of U.S. Treasury Secretary Janet Yellen to China given the threat of a worsening trade conflict between the two countries after China imposed curbs on the export of key chipmaking materials to the U.S. earlier this week.

Oil drops on U.S. activity fears

Oil prices edged lower Thursday as concerns about additional interest rate hikes curbing economic activity in the U.S., the largest consumer of crude in the world, overshadowed shrinking U.S. stockpiles.

Data released Wednesday by the industry group showed that U.S. oil inventories shrank nearly 4.4 million barrels in the week to June 30, far more than expectations for a draw of 1.8 million barrels.

Official numbers from the are due later in the session, but a series of reductions in stocks have boosted hopes that U.S. oil demand is increasing during the travel-heavy summer season. 

By 02:00 ET, the contract dropped 0.5% to $76.26, while futures traded 0.3% lower at $71.58 a barrel.

Additionally, fell 0.1% to $1,926.45/oz, while traded 0.1% lower at 1.0846.