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ECB policy decision looms as European stock futures show mixed signals

Investors are anticipating a mixed opening for European stock markets on Thursday as they await the decision from the European Central Bank regarding its monetary policy following the latest interest rate hike by the Federal Reserve. At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 0.1% higher and CAC 40 futures in France climbed 0.1%, while the FTSE 100 futures contract in the U.K. fell 0.2%. The Fed’s decision to increase the federal funds rate range by 25 basis points to 5%-5.25% was delivered on Wednesday, which is the highest level since August 2007. The central bank also indicated that it might pause its tightening cycle in June to assess inflationary pressures and the impact on lending conditions from the series of bank failures.

Attention is now focused on Europe, where the ECB is expected to tighten monetary policy by lifting interest rates for the seventh time. However, the size of the increase remains uncertain. Most anticipate that officials will raise the benchmark rate by a quarter-point to 3.25%, given the signs of stabilizing underlying inflation and tightening credit conditions. But a larger hike of 50 basis points cannot be ruled out as headline inflation remains high at 7%.

Before the decision, economic data includes the final services PMI for much of Europe and the Eurozone producer prices for March, which is expected to show a fall of 1.7% on the month, an annual increase of 5.9%.

In corporate news, ArcelorMittal (AS:MT) reported higher-than-expected first-quarter earnings, while Anheuser Busch Inbev (EBR:ABI) reported higher-than-expected earnings, helped by sharply higher prices. Volkswagen (ETR:VOWG_p) reported a sharp rise in revenue in the first quarter, but the German carmaker saw a drop in operating profit after last year’s first quarter profit was boosted by commodity hedging. French IT consulting group Capgemini (EPA:CAPP) reported weaker revenue growth in the first quarter versus the same period of last year, citing a tense economic environment. Oil giant Shell (LON:RDSa) is also scheduled to report its quarterly earnings.

Oil prices rose on Thursday, rebounding after a three-day plunge due to concerns that interest rate increases would stunt economic growth and hit demand in the world’s major consumers. U.S. oil inventories continued to shrink, falling just over one million barrels last week, according to official data from the Energy Information Administration. By 02:00 ET, U.S. crude futures traded 0.9% higher at $69.22 a barrel, while the Brent contract climbed 1.2% to $73.19. Both benchmarks were trading down between 8% and 11% for the week and were close to their lowest levels since December 2021. Additionally, gold futures rose 0.7% to $2,051.00/oz, while EUR/USD traded 0.2% higher at 1.1084.

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