European Stock Futures Higher; Weaker U.S. CPI Boosts Sentiment

By Peter Nurse 

Investing.com - European stock markets are expected to open higher Thursday, boosted by strong gains on Wall Street overnight after weaker-than-expected U.S. inflation eased the pressure on the U.S. Federal Reserve to aggressively tighten monetary policy.

At 2 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.3% higher, CAC 40 futures in France climbed 0.3% and the FTSE 100 futures contract in the U.K. rose 0.2%.

European equities closed higher Wednesday and are expected to continue rallying on Thursday following the positive lead from Wall Street, after the blue chip Dow Jones Industrial Average closed up over 500 points, or 1.6%.

These gains stemmed from the headline U.S. consumer price index rising 8.5% year over year in July and was flat compared with June, below the expected increases of 8.7% and 0.2%, raising expectations that the Federal Reserve will hike rates at a slower pace this year.

Investors are now pricing in a 50 basis point hike by the Fed in September, down from earlier expectations of a 75 basis point hike. 

The earnings season continued in Europe Thursday, with Deutsche Telekom (OTC:DTEGY) in the spotlight after the communications giant lifted its annual outlook for the second time and posted quarterly core profit above estimates on Thursday, supported by an upbeat performance in its U.S. unit T-Mobile.

Siemens (ETR:SIEGn) reported better-than-expected revenues for its third quarter on Thursday, but a writedown at Siemens Energy pushed the engineering and technology group into the red for the first time in nearly 12 years.

Daimler Truck (ETR:DTGGe) reported a hefty rise in second-quarter earnings on strong demand, while Thyssenkrupp's (ETR:TKAG) third-quarter operating profit nearly tripled on the back of higher steel prices.

Zurich Insurance (SIX:ZURN) reported a better-than-expected 25% rise in operating profit to $3.39 billion in the first half, with both its property and casualty and its life businesses outperforming.

Oil prices edged lower Thursday after a sharp rise in U.S. crude stocks and as concerns over supply disruptions eased.

U.S. crude inventories rose by 5.5 million barrels in the most recent week, according to data from the Energy Information Administration, more than the expected increase of 73,000 barrels. 

This is the second straight week of an unexpectedly large rise in U.S. oil stocks, suggesting weakening demand at the world’s largest consumer.

Also weighing was the resumption of flows through a key European pipeline, from Russia along the southern Druzhba network, as a payment dispute was resolved.

By 2 AM ET, U.S. crude futures traded 0.1% lower at $91.80 a barrel, while the Brent contract fell 0.1% to $97.34. 

Additionally, gold futures fell 0.7% to $1,801.50/oz, while EUR/USD traded 0.1% lower at 1.0285.