European stock futures lower; crypto turmoil, U.S. political uncertainty weigh

By Peter Nurse 

Investing.com - European stock markets are expected to open lower Thursday, with turmoil in the crypto market dampening sentiment while investors continue to digest U.S. midterm elections as well as quarterly corporate results.

At 02:00 ET (07:00 GMT), the DAX futures contract in Germany traded 0.5% lower, CAC 40 futures in France dropped 0.4% and the FTSE 100 futures contract in the U.K. fell 0.3%.

The U.S. political climate remained uncertain Thursday, two days after the midterm elections, with Republicans edging closer to securing a majority in the House of Representatives, while control of the Senate hung in the balance.

U.S. President Joe Biden stated Wednesday that he is “prepared to work” with Republicans if they win control of one or both chambers of Congress, but that would allow Republicans to make it very difficult for Biden to pass any legislation that they have difficulty with.

Adding to the risk-averse mood is the wave of cryptocurrency selling prompted by the financial difficulties at crypto exchange FTX. Bigger rival Binance announced Thursday that it has walked away from a bailout after due diligence.

Back in Europe, quarterly corporate earnings continue to flow.

Deutsche Telekom (ETR:DTEGn) lifted its full-year guidance after strong third-quarter profit, boosted by its T-Mobile US (NASDAQ:TMUS) business adding customers, while Merck KGaA (ETR:MRCG) reported better-than-expected quarterly earnings on higher revenues from pharmaceuticals and biotech lab equipment.

Credit Agricole SA (EPA:CAGR) reported higher than expected profits in the third quarter, driven mainly by a rise in corporate loans and consumer finance revenues, while Zurich Insurance Group (SIX:ZURN) announced it will likely take a net $550 million pretax hit from Hurricane Ian.

The European data slate is largely empty Thursday, with the day’s main focus set to be on U.S. inflation data later in the session. Economists expect the annual headline rate to fall to 8.0%, the lowest since February.

Oil prices edged lower Thursday, continuing to retreat on concerns for demand growth from China, the world’s largest importer, on renewed COVID restrictions as cases surge, coupled with a rise in U.S. crude oil inventories.

The city of Guangzhou, a key manufacturing hub, reported more than 2,000 new cases for Nov. 9, the third day above that level, while local cases across China reached their highest since April 30.

U.S. crude oil stockpiles rose by 3.9 million barrels last week, according to data from the Energy Information Administration Wednesday, taking inventories to their highest since July 2021. 

The bulk of this increase, however, could be put down to a roughly 3.5 million barrel drawdown from the Strategic Petroleum Reserve.

By 02:00 ET, U.S. crude futures traded 0.2% lower at $85.69 a barrel, while the Brent contract fell 0.1% to $92.58. 

Brent prices have dropped more than 6% so far this week, while WTI is down more than 7%.

Additionally, gold futures fell 0.1% to $1,711.90/oz, while EUR/USD traded 0.2% higher at 1.0029.