European stock futures mixed; U.S. regulators move to support financial system

By Peter Nurse 

Investing.com - European stock markets are expected to open in a cautious manner Monday, with investors digesting the moves by U.S. regulators over the weekend to support their banking system.

At 02:10 ET (07:10 GMT), the DAX futures contract in Germany traded 0.2% higher, while CAC 40 futures in France dropped 0.1% and the FTSE 100 futures contract in the U.K. traded unchanged.

The U.S. authorities announced over the weekend that they would cover all depositors at Silicon Valley Bank (NASDAQ:SIVB), after the lender failed last week, and the same for SignatureBank, which also collapsed over the weekend.

These failures marked the second- and third-largest in U.S. banking history.

The Federal Reserve also made it easier for banks to borrow from it in emergencies, in an attempt to prevent these collapses from having wider repercussions through both the tech and finance industries.

Additionally, investors are now becoming hopeful that these shocks to the finance system will prompt the Fed to take a more dovish stance when it meets later this month.

Goldman Sachs said on Sunday the Fed would now hold off from delivering a rate hike at its March 22 meeting in light of the recent stress in the banking sector.

Goldman previously expected a 25-basis-point hike in March.

The European Central Bank meets on Thursday, and is still expected to hike interest rates by another 50 basis points after recent data showed that underlying inflation in the Eurozone remained elevated.

In corporate news, Novartis (SIX:NOVN) has formally launched its new share buyback program, with the Swiss pharmaceutical giant set to spend up to CHF 10 billion ($10.90 billion) repurchasing its shares over the next three years.

German software group SAP (ETR:SAPG) agreed to sell its stake in data analytics firm Qualtrics for $7.7B.

Oil prices edged higher Monday, benefiting from a weaker dollar as concerns surrounding the U.S. banking sector raised expectations that the Federal Reserve will temper its monetary tightening policy going forward.

The dollar index, which tracks the greenback against a basket of six other currencies, fell to two-week lows, making oil cheaper for holders of other currencies.

By 02:10 ET, U.S. crude futures traded 0.2% higher at $76.83 a barrel, while the Brent contract rose 0.4% to $83.07. Both benchmarks slumped around 4% last week as weak economic data from China and worries about a hawkish Fed increased concerns over a recovery in crude demand later this year.

Additionally, gold futures rose 0.5% to $1,877.05/oz, while EUR/USD traded 0.7% higher at 1.0720.