European stock futures drift lower; Fed meeting, eurozone CPI in spotlight

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Investing.com - European stock markets are expected to open in a subdued manner Tuesday, as investors await the start of the crucial two-day U.S. Federal Reserve policy meeting as well as the release of more inflation data from the eurozone.

At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 0.2% lower, CAC 40 futures in France dropped 0.3% and the FTSE 100 futures contract in the U.K. fell 0.2%. 

Fed meeting prompts caution

Investors are likely to adopt a cautious start to trading Tuesday as they await news from Washington as Federal Reserve policymakers begin discussing their response to the U.S. economic outlook.

The U.S. central bank is widely expected to keep interest rates steady at a range of 5.25% to 5.50% when the meeting concludes on Wednesday, after raising them at 11 of its past 12 meetings in a bid to cool inflation. 

But markets are not in full agreement whether the Fed will be done as of now or whether it will raise rates one more time this year, as inflation still remains above its 2% target.

Final August eurozone CPI data due

Back in Europe, the eurozone’s final inflation figures for August are due later in the session, and are expected to confirm that CPI rose 0.6% on the month, a rise of 5.3% on an annual basis.

This is still substantially above the European Central Bank’s 2% medium term inflation target, hence the central bank’s interest rate hike last week. But core inflation, which excludes volatile energy and food prices, is seen falling to 5.3% from 5.5% annually.

The ECB raised its deposit rate to a record high 4% last week but also hinted at a pause in its rate-hiking cycle as the policymakers assess the impact of the numerous interest rate increases on the region’s economy.

Officials will need until March to be sure that last week’s rise was the last and further rate hikes cannot yet be ruled out, Slovak policymaker Peter Kazimir said on Monday.

Credit Suisse takeover held up by “slow” approval

In the corporate sector, earnings are scheduled from DIY chain Kingfisher (LON:KGF) and Ocado (LON:OCDO) Retail. 

UBS (SIX:UBSG) could also be in focus, after the Swiss banking giant identified at least four countries–South Korea, India, Ireland and Saudi Arabia–as being "slow" in granting regulatory approvals which it needs to complete its takeover of Credit Suisse, according to a Reuters report.

Crude gains on weak U.S. shale production

Oil prices continued to power ahead Tuesday, rising for the fourth consecutive session, on further supply concerns following the release of a weak U.S. shale production forecast.

U.S. oil output from top shale-producing regions is on track to fall for a third month in a row in October to the lowest level since May 2023, the U.S. Energy Information Administration said in its monthly drilling productivity report on Monday.

This has added to worries of a substantial supply deficit this year stemming from extended production cuts by Saudi Arabia and Russia.

By 02:00 ET, the U.S. crude futures traded 0.7% higher at $91.24 a barrel, while the Brent contract climbed 0.6% to $95.00. 

Prices have gained for three consecutive weeks, and are now around 10-month highs for both benchmarks.

Additionally, gold futures fell 0.1% to $1,952.10/oz, while EUR/USD traded 0.1% lower at 1.0680.