European stock futures higher; stability returns to banking sector

By Peter Nurse 

Investing.com - European stock markets are expected to open higher Tuesday as a degree of stability returns to the region’s banking sector ahead of business confidence data from France and Italy.

At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 0.3% higher, CAC 40 futures in France climbed 0.1% and the FTSE 100 futures contract in the U.K. rose 0.3%. 

Confidence is starting to return to European stock markets after the recent turmoil surrounding the global banking sector, which resulted in the collapse of a couple of regional U.S. banks and the state-orchestrated rescue of Credit Suisse (SIX:CSGN) by rival UBS (SIX:UBSG).

European banking shares rose on Monday, paring last week's sharp declines, and officials at the European Central Bank have been at pains to point out that the region is much better prepared than it was for the 2008 collapse.

“We see there’s increased concern in financial markets over the situation in the U.S. and Swiss jurisdictions,” Governing Council member Gediminas Simkus said on Monday. “But if we look at banks in the euro system, it’s a different jurisdiction, where there’s high capital buffers, high liquidity and growing profitability from rising interest rates.”

The ECB raised interest rates by 50 basis points earlier this month, in a sign of confidence in the region’s banks while the officials continue their ongoing battle against soaring prices.

Inflation data due Friday are set to show annual CPI gains slowed steeply in February, though underlying inflation is likely to have pushed higher, underlining the need for the ECB to remain vigilant.

Ahead of this, French and Italian business confidence data for March are due for release, and these follow data from the Ifo institute released Monday which showed German business morale unexpectedly rose in March despite the recent banking turmoil.

Also of interest will be a speech from ECB President Christine Lagarde at an opening ceremony of BIS Innovation Hub Eurosystem Centre in Frankfurt later in the session.

Oil edged lower Tuesday as its recent rally stalled ahead of the release of the latest U.S. crude stockpiles data, which could provide information about the supply-demand outlook in the world’s largest consumer.

The American Petroleum Institute, an industry group, will publish its inventory data later in the session, and is expected to show another build after expanding last week by just over 3 million barrels.

By 02:00 ET, U.S. crude futures traded 0.1% lower at $72.73 a barrel, while the Brent contract dropped 0.5% to $77.36. 

The crude market has bounced from the 15-month lows seen earlier this month as markets feared that slowing economic growth will dent crude demand this year.

Additionally, gold futures rose 0.3% to $1,977.70/oz, while EUR/USD traded 0.1% higher at 1.0811.