European Stock Futures Mixed; Inflation Data, Ukraine War in Focus
2022.04.13 09:41
By Peter Nurse
Investing.com – European stock markets are expected to open in a mixed fashion Wednesday, with investors weighing the risks associated with soaring inflation, central bank policies and the ongoing Ukraine conflict.
At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.6% higher, while CAC 40 futures in France dropped 1.3% and the FTSE 100 futures contract in the U.K. fell 0.1%.
Hopes for a prompt end to the war in Ukraine received a blow late Tuesday after Russian President Vladimir Putin vowed to continue the invasion, stating that peace talks with Ukraine were “at a dead end”, while suggesting the seven-week offensive is going to plan.
U.S. President Joe Biden said for the first time that Moscow’s invasion of Ukraine amounts to genocide, and the United States is reportedly set to announce an additional $750 million in military assistance, in a sign the war is expected to drag on.
Elsewhere, the highly-anticipated U.S. consumer price index rose 8.5% year-on-year in March, its highest level since late 1981. However, U.S. yields weakened on Tuesday, snapping seven straight sessions of gains, as some traders saw the CPI release as not as bad as previously feared.
The yield on 10-year Treasury notes was at 2.75% early Wednesday, compared with an over-three-year peak of 2.836% before the inflation data.
The U.K. equivalent CPI rose more than expected Wednesday, up 7% on the year in March, to a 30-year high, up 1.1% on the month.
These inflationary pressures are likely to keep the Bank of England on its tightening path, with the U.K. central bank having already lifted interest rates back to pre-pandemic levels, hiking at three consecutive meetings for the first time since 1997.
The European Central Bank is set to hold its latest policy setting meeting on Thursday, and the pressure is mounting on the policymakers to tighten its monetary policy with data released Tuesday showing German consumer price inflation rising 7.3% on the year.
In corporate news, European auto conglomerate Stellantis (PA:STLA) said it would sell its entire stake in an auto financing joint venture with Dongfeng to the Chinese car maker as part of its plans to consolidate its own financial services.
Oil prices edged higher Wednesday, continuing the previous session’s hefty gains with concerns remaining about the market becoming even tighter if Russian supply is further reduced.
Russian President Vladimir Putin’s comments that peace talks had come to a dead end have raised fears that the European Union could embargo Russian crude to further punish Moscow.
OPEC cut its forecast for growth in world oil demand in 2022 on Tuesday, but the U.S. Energy Information Administration forecast that U.S. power consumption will rise in 2022 and 2023 as the economy grows.
While U.S. crude stockpiles rose by 7.8 million barrels last week, the American Petroleum Institute reported Tuesday, gasoline inventories fell by 5 million barrels, an indication of strong U.S. fuel demand.
The official crude oil supply data from the EIA is due later in the day.
By 2:05 AM ET, U.S. crude futures traded 0.2% higher at $100.75 a barrel, while the Brent contract rose 0.3% to $104.99. Both benchmarks climbed more than 6% in the previous session.
Additionally, gold futures fell 0.3% to $1,970.60/oz, while EUR/USD traded 0.1% higher at 1.0841.
