European stock markets are expected to open higher on Thursday. This is because Wall Street ended on a high note, which has a positive effect on global sentiment. However, gains are likely to be small because of the upcoming meeting of the European Central Bank.
At 02:00 ET (06:00 GMT), the DAX futures contract in Germany went up 0.5%, the CAC 40 futures contract in France went up 0.3%, and the FTSE 100 futures contract in the U.K. went up 0.2%.
The European Central Bank will be the main focus of the market on Thursday. It is widely expected that the central bank will raise interest rates again to try to stop inflation from getting close to 10 percent.
Also Read: Futures on European stocks decline; German retail sales surprise positively.
Most likely, the ECB will raise rates by 50 basis points, the same amount as in July. However, with inflation at a record high and the cut in Russian gas supply driving up energy prices, even more, there are good reasons for the ECB to be even more aggressive and raise rates by 75 basis points, which would be the biggest increase ever.
Still, the central bank has to find a way to strike a balance. Due to the ongoing energy crisis, economic activity in the Eurozone is already slowing down a lot, which points to a recession later in the year.
Wall Street is likely to send good news to European stock markets on Thursday. The blue-chip Dow Jones Industrial Average ended Wednesday’s session up more than 400 points, or 1.4%. This ended a seven-session losing streak.
Also Read: European stocks recovered in advance of inflation data.
Fed Chair Jerome Powell will take part in a panel discussion at the Cato Institute’s virtual meeting later on Thursday. Investors will be looking for clues about the central bank’s thinking before its next policy-setting meeting later this month.
In business news, Melrose Industries (LON:MRO) will be in the spotlight after the Financial Times said the company plans to break up one of Britain’s oldest engineering businesses by spinning off its GKN automotive unit as a new UK-listed company. GKN makes jet and car parts.
Thursday, oil prices went up because the U.S. Energy Information Agency said that demand will be a little bit higher and supply will be a little bit tighter through 2023. This helped the prices rise, but the gains were limited by worries about slowing global growth.
Also Read: Futures on European stocks decline; German retail sales surprise positively.
In its monthly Short-Term Energy Outlook report, the EIA said that it expects the global demand for crude oil to rise in the fourth quarter of 2022 and the first quarter of 2023. It also said that U.S. oil production will go down this year.
Part of this good news was taken away by data from the American Institute of Petroleum that showed U.S. crude stockpiles unexpectedly went up last week. This made people worry about a slowdown in oil demand around the world. Official inventory numbers are due later in the session, which is a day later than usual because of the Labor Day holiday on Monday.
By 2:00 ET, U.S. crude futures had gone up 0.9% to $82.66 per barrel, while the Brent contract went up 0.7% to $88.61 per barrel. On Wednesday, both contracts fell to their lowest levels since January. Weak economic data from China caused people to worry about a slowdown in the world economy.
Also, gold futures went down slightly to $1,727.45/oz, while EUR/USD went up 0.1% to 1.0005.
Also Read: European stock futures are falling; potential energy shortages are weighing.
