European Stock Futures Higher; Eurozone CPI Data in Focus

By Peter Nurse 

Investing.com - European stock markets are expected to edge higher at the open Wednesday, as investors digest the latest Chinese manufacturing activity data ahead of the key Eurozone inflation release.

At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 0.7% higher, CAC 40 futures in France climbed 0.4% and the FTSE 100 futures contract in the U.K. rose 0.3%.

Chinese manufacturing activity contracted for a second straight month in August, as COVID-19 lockdowns and a brewing power crunch continued to weigh on economic activity.  

The official manufacturing purchasing managers' index came in at 49.4 for August. While this was below 50 which indicates contraction in the sector, it was still an improvement from July’s 49.0 and also better than the expected 49.2, indicating a slight improvement in conditions from the previous month.

This is likely to lead to a positive start to the day in Europe, although eyes are likely to be on the release of the latest Eurozone consumer price index. This is expected to show European inflation hit a record high of 9% in August, putting further pressure on the European Central Bank to aggressively raise interest rates next month.

Europe's gas prices have backed down from record highs, but this could still be a temporary measure as Russia has shut off gas flow along the Nord Stream pipe to Germany, for the second time in as many months.

Other economic data due for release include the latest French GDP numbers for the second quarter as well as German unemployment in August.

Oil prices edged higher Wednesday, bouncing after the previous session’s hefty losses on signs of firm fuel demand in the United States, the largest consumer in the world.

Data released late Tuesday by the American Petroleum Institute, an industry body, showed U.S. crude inventories unexpectedly rose by 593,000 barrels last week. However, gasoline stockpiles fell by 3.4 million barrels, suggesting consumer demand for gas has proved resilient despite rising inflation and interest rates.

Yet, despite this, oil is headed for a third straight monthly drop, the longest losing run in more than two years, largely on prospects for slower global growth as central banks aggressively lift interest rates.

By 02:00 ET (06:00 GMT), U.S. crude futures traded 0.9% higher at $92.45 a barrel, while the Brent contract rose 0.9% to $98.73. Both benchmarks slumped around 5% on Tuesday, the steepest decline in around a month. 

Additionally, gold futures edged lower to $1,735.90/oz, while EUR/USD traded 0.2% higher at 1.0034.