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European Stock Futures Higher; Central Banks Communication in Focus

Stock Markets Jul 05, 2022 08:22
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By Peter Nurse - European stock markets are expected to open higher Tuesday, continuing the positive start to the new month with investors focusing on guidance from a number of key central banks.

At 02:00 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.5% higher, CAC 40 futures in France climbed 0.5% and the FTSE 100 futures contract in the U.K. rose 0.2%.

The region’s main equity indices largely closed higher Monday albeit in quiet trading with the U.S. on holiday, building on Friday’s positive start to the new month as investors sought out bargains after a bruising first half of the year.

Worries that central banks around the world will push economies into recession in tackling rampant inflation sent investors running for cover during the first six months of the year, with the broad-based pan-European STOXX 600 down some 16% year to date.

Helping the tone Tuesday was healthy economic data out of China, as the country's Caixin services purchasing managers' index rose to 54.5 in June, from 41.4 in May, indicating the fastest growth since July last year and the first expansion since February as easing COVID curbs revived demand.

That said, central bank action will remain a dominant influence this week, with the Reserve Bank of Australia lifting its cash rate by 50 basis points to 1.35% earlier Tuesday. 

This move was widely expected, with Australia’s central bank hiking for a third straight month and flagging more increases ahead as it struggles to contain surging inflation.

The Bank of England is due to publish its latest biannual Financial Stability Report later in the session, while the Fed releases the minutes of its latest policy-setting meeting on Wednesday and the European Central Bank does the same on Thursday.

Economic data due for release in Europe Tuesday includes French industrial production, final PMI data for the Eurozone and Spanish consumer confidence.

Credit Suisse (SIX:CSGN) will also be in focus after the Swiss banking giant named Roger Suter as its new head of private banking in Switzerland, succeeding current manager Serge Fehr.

Oil prices edged higher Tuesday, helped by further supply cuts although concerns over a possible global economic slowdown limited the gains.

Norwegian offshore workers began a strike earlier in the session that is expected to cut the oil output by as much as 130,000 barrels per day from Wednesday, the country's oil and gas association forecast on Sunday, about 6.5% of Norway's production.

That said, there remain worries that economic activity, and thus demand for energy, will be hit amid a broad tightening in global financial conditions. This is occurring as a number of central banks, and the U.S. Federal Reserve, in particular, fight rampant inflation.

By 02:05 AM ET, U.S. crude futures traded 1.6% higher at $110.12 a barrel, while the Brent contract was largely unchanged at $113.250. There was no settlement for WTI on Monday because of the Independence Day public holiday in the United States.

Additionally, gold futures rose 0.6% to $1,811.60/oz, while EUR/USD traded 0.1% higher at 1.0436.

European Stock Futures Higher; Central Banks Communication in Focus

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