European Stock Futures Edge Higher; Investors Digest Fed Decision

By Peter Nurse

Investing.com - European stock markets are expected to open largely higher as investors digest the outcome of the latest Federal Reserve meeting while the corporate earnings season continues.

At 02:00 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.5% higher, CAC 40 futures in France climbed 0.1%, while the FTSE 100 futures contract in the U.K. fell 0.1%.

The U.S. Federal Reserve raised its policy target interest rate on Wednesday by three-quarters of a percent for the second month in a row, as widely expected, but Fed Chair Jerome Powell also dropped guidance on the size of the next rate rise, creating the possibility that the central bank could soon pivot to a slower pace of rate hikes.

“We have the best part of two months until the September 21st FOMC meeting, a period that includes two jobs reports, two inflation reports, and the Fed’s Jackson Hole symposium. A lot could happen in that time so it is unsurprising that the Fed is being somewhat vague in its forward guidance,” said analysts at ING, in a note.

The latest reading of U.S. gross domestic product for the second quarter is due later in the session, and another negative reading would meet the technical definition of a recession, though the United States chooses to define such an event differently.

Back in Europe, quarterly corporate earnings continue to pour in.

Anheuser Busch Inbev (EBR:ABI), the world's largest brewer, reported higher than expected second-quarter earnings as consumers drank more and also paid higher prices.

Orange (EPA:ORAN), France's biggest telecoms firm, said its second-quarter core operating profit rose 0.5% from a year earlier, as strong growth from its African and Middle East division offset a fall in sales in its home country and Spain.

Franco-Italian chipmaker STMicroelectronics (EPA:STM) reported that second-quarter revenue exceeded expectations and raised its full-year outlook, benefiting from strong demand for its chips used in smartphones to cars.

Nestle (SIX:NESN), the world’s biggest food group, raised its full-year sales growth forecast to 7%-8% and just slightly lowered its margin guidance after cost inflation hurt the Swiss company less than expected and price increases boosted organic sales growth in the first half of 2022.

On the data front, preliminary German inflation figures will be studied carefully for signs that inflationary pressures in the Eurozone are starting to lessen.

Oil prices rose Thursday, supported by lower crude inventories and a rebound in gasoline demand in the U.S., the world’s largest consumer.

Data from the Energy Information Administration, released Wednesday, showed U.S. crude oil stockpiles fell 4.5 million barrels last week, against expectations of a 1 million-barrel drop, while U.S. gasoline demand rebounded by 8.5% week on week.

By 02:00 AM ET, U.S. crude futures traded 1.3% higher at $98.55 a barrel, while the Brent contract rose 1.2% to $102.92.

Additionally, gold futures rose 1% to $1,736.20/oz, while EUR/USD traded 0.2% higher at 1.0219.