European stock futures lower; regional CPI data, U.K. trade deal in focus

By Peter Nurse 

Investing.com - European stock markets are expected to open marginally lower Tuesday in cautious trading as investors digest the new trade deal between the U.K. and the European Union ahead of the release of key regional inflation data. 

At 02:00 ET (07:00 GMT), the DAX futures contract in Germany traded 0.2% lower, CAC 40 futures in France dropped 0.1% and the FTSE 100 futures contract in the U.K. fell 0.1%.

British Prime Minister Rishi Sunak announced late Monday that the U.K. has struck a deal with the European Union on post-Brexit trade rules for Northern Ireland on Monday, seeking to resolve the tensions caused by the trading rules for the only part of the U.K. that has a land border with the EU.

The deal, if passed through the U.K. parliament, will likely pave the way for a better relationship between London and Brussels, and could remove some of the uncertainty that has hurt British assets since the 2016 vote to leave the bloc.

That said, this news is unlikely to remove the downbeat mood among investors as markets become increasingly wary of a further rise in borrowing costs with inflation remaining elevated.

Both France and Spain release consumer price data for February later in the session, and are expected to show that inflation remains stubbornly high despite sharp increases in interest rates by the European Central Bank.

German import prices fell 1.2% on the month in January, a welcome drop but not as large as the 1.5% fall expected.

Another 50-basis point rate hike at the ECB’s upcoming meeting in mid-March is widely expected, and the markets are currently pricing in another 75 basis points of moves in the Eurozone before the end of the summer.

Eurozone inflation pressures have begun to ease, ECB Chief Economist Philip Lane said earlier Tuesday, adding the central bank will not end rate hikes until it is confident price growth is heading back towards 2%.

In the corporate sector, Bayer (ETR:BAYGN) will be in the spotlight after the German pharmaceutical and biotechnology giant forecast operating earnings falling in 2023, hurt by higher costs.

More earnings are also due from the likes of Ocado (LON:OCDO), Man Group (LON:EMG), Adecco (SIX:ADEN) and Atos (EPA:ATOS).

Oil prices edged higher Tuesday, but the benchmark contracts are still on course for monthly losses amid concerns further U.S. interest rate hikes will hit demand in the world's largest economy.

Attention later in the session will fall on the latest U.S. oil stocks data due from the American Petroleum Institute industry group, ahead of the official data from the Energy Information Administration on Wednesday for further clues on crude demand in the world’s largest consumer of energy.

By 02:00 ET, U.S. crude futures traded 0.7% higher at $76.23 a barrel, while the Brent contract rose 0.7% to $82.59. Both contracts are on course to drop 5% this month.

Additionally, gold futures fell 0.2% to $1,822.20/oz, while EUR/USD traded 0.2% lower at 1.0589.