European Stock Futures Mixed; Fed Meeting Looms Large
2022.06.15 09:25
By Peter Nurse
Investing.com – European stock markets are expected to open in a mixed fashion Wednesday, with investors cautious ahead of the latest Federal Reserve policy meeting amid concerns aggressive tightening to curb rampant inflation could push the global economy into recession.
At 2 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.8% higher, CAC 40 futures in France climbed 0.7%, while the FTSE 100 futures contract in the U.K. fell 0.3%.
The Fed signaled at its meeting in May that half-point increases were very likely at its next two meetings, in June and July, but expectations have been rising in the wake of Friday’s red-hot U.S. consumer inflation report that it will act even more aggressively, and raise its benchmark rate by three-quarters of one point.
The FOMC decision will be announced at 2 PM ET (1800 GMT) followed by a press conference by Chair Jerome Powell.
Worries that a hawkish Fed will hurt U.S. growth, and by extension global growth, have helped drive the benchmark S&P 500 index into bear market territory, which could indicate a recession is approaching. Additionally, the U.S. Treasury yield curve inverted on Monday, another widely followed recession signal.
The European Central Bank confirmed late last week that it intends to start its rate hiking cycle in July, a move which resulted in the spread between the yields of Germany and more indebted southern nations, particularly Italy, soaring to its highest in over two years.
The ECB’s rate-setting Governing Council is set to hold an unscheduled meeting later Wednesday to discuss the recent sell-off in government bond markets.
The economic data slate in Europe Wednesday largely centers around French inflation, with May consumer prices expected to rise 0.6% on the month, climbing 5.2% on the year.
Earlier in the day, China’s economy showed signs of recovery in May as industrial production rose 0.7% in May from a year earlier, after falling 2.9% in April.
In corporate news, Stellantis (EPA:STLA) will be in the spotlight and the world’s fourth largest carmaker said late Tuesday it will begin laying off employees next week at its Sterling Heights stamping plant in Michigan.
Oil prices edged higher Wednesday amid limited volatility as traders focused on the Fed decision and the potential for further U.S. monetary tightening.
U.S. crude inventories unexpectedly increased last week, with data from the industry body American Petroleum Institute pointing to a build of 736,000 barrels last week, but gasoline stockpiles still fell by 2.2 million barrels last week, suggesting demand from American drivers remained strong despite the record prices.
The official numbers from the U.S. Energy Information Administration are due later in the session and will be studied for further clues on how tight energy supplies remain in the world’s largest consumer.
By 2 AM ET, U.S. crude futures traded 0.4% higher at $119.39 a barrel, while the Brent contract rose 0.4% to $121.36.
Additionally, gold futures rose 0.3% to $1,819.75/oz, while EUR/USD traded 0.5% higher at 1.0464.
