European Stock Futures Slip Lower; U.S. CPI in Spotlight

By Peter Nurse

Investing.com - European stock markets are expected to open marginally lower Wednesday ahead of the release of key U.S. inflation data which could provide clues to the U.S. Federal Reserve’s future monetary tightening plans.

At 02:00 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.3% lower, CAC 40 futures in France dropped 0.1%, and the FTSE 100 futures contract in the U.K. fell 0.1%.

Global stock indices have been on tenterhooks this week ahead of the latest U.S. consumer inflation report, looking for signs that prices are close to peaking, providing the Federal Reserve with a reason to relent in its aggressive campaign to tame the highest inflation in decades.

U.S. CPI is due at 08:30 AM ET (1230 GMT), and is expected to come in at 8.7% for July, down slightly from the 9.1% seen in the prior month. While such a dip could indicate that inflation has peaked, it would still remain near its highest level in forty years.

The Fed has indicated that several monthly declines in CPI growth would be needed before it lets up on the aggressive monetary policy tightening, so a dramatic fall would be needed to substantially change the narrative.

Data earlier Wednesday showed China’s consumer price and producer price indexes grew at a slower-than-expected rate in July, showing that the country was still grappling with damaging COVID-19 lockdowns.

Additionally, German CPI rose 0.9% on the month in July, falling only marginally to 7.5% on the year, showing that price pressures remained strong in Europe’s largest economy.

In corporate news, E.ON (ETR:EONGn), Europe's largest operator of energy networks, cut the value of its stake in the Nord Stream 1 gas pipeline by around 700 million euros ($715 million), citing "heightened uncertainty" over the impact of Russia's war on Ukraine.

Prudential (LON:PRU) posted a rise of 8% in its first-half operating profit, but the Asia-focused insurer warned of challenging conditions for the rest of the year as COVID curbs persist in some markets.

Oil prices eased lower Wednesday after industry data showed a surprise rise in U.S. crude stocks, hinting at slowing demand at the world’s largest consumer.

Data from the American Petroleum Institute, released late Tuesday, indicated that U.S. crude inventories rose by about 2.2 million barrels last week, compared with a forecast of a rise of less than 100,000 barrels.

Official government data are due later Wednesday, and a similar figure would mark a second straight week of unexpectedly large U.S. oil stocks.

That said, losses have been limited, supported by supply concerns after Ukraine halted flows on Tuesday through a key crude pipeline from Russia to Europe as sanctions blocked payment of Moscow’s transit fee.

By 02:00 AM ET, U.S. crude futures traded 0.8% lower at $89.75 a barrel, while the Brent contract fell 0.7% to $95.68.

Additionally, gold futures fell 0.4% to $1,804.25/oz, while EUR/USD edged higher to 1.0212.