European stock futures decline; CPI data from the area; U.K. trade deal in focus
In cautious trading, European stock markets are anticipated to start Tuesday slightly lower as investors assess the new trade agreement between the U.K. and the European Union before the release of crucial regional inflation data.
The CAC 40 futures in France fell 0.1%, the FTSE 100 futures in the U.K. fell 0.1%, and the DAX futures contract in Germany moved 0.2% lower at 02:00 ET (07:00 GMT).
In an effort to ease tensions brought on by the trade rules for the sole region of the U.K. with a land border to the EU, British Prime Minister Rishi Sunak revealed late on Monday that the U.K. and the EU had reached an agreement on post-Brexit trade rules for Northern Ireland.
If approved by the British parliament, the agreement will probably lead to improved ties between London and Brussels and could lessen some of the uncertainty that has hurt British assets since the country’s decision to leave the EU in 2016.
Despite this, investors’ pessimism is unlikely to be lifted by this news as markets grow increasingly anxious about an increase in financing costs while inflation remains high.
Later in the session, France and Spain both issue their consumer price data for February, and both are anticipated to demonstrate that, despite the European Central Bank’s sharp increases in interest rates, inflation is still stubbornly high.
German import prices decreased 1.2% on a monthly basis in January, which is a positive decrease but less than the 1.5% decline anticipated.
The markets are presently pricing in another 75 basis points of moves in the Eurozone before the end of the summer, in addition to the widely anticipated additional 50 basis point rate hike at the ECB’s upcoming meeting in mid-March.
Inflation pressures in the eurozone have started to ease, according to ECB Chief Economist Philip Lane, who also noted that the institution will continue raising interest rates until it is satisfied that inflation is returning to the 2% mark.
The German pharmaceutical and biotechnology giant Bayer (ETR:BAYGN) will be in the limelight in the corporate sector after forecasting declining operating profits in 2023 due to rising costs.
Additionally, companies like Ocado (LON:OCDO), Man Group (LON:EMG), Adecco (SIX:ADEN), and Atos are expected to report higher profits (EPA:ATOS).
Tuesday saw a slight increase in oil prices, but the benchmark contracts are still on track for monthly losses due to worries that demand in the world’s biggest economy will be negatively impacted by further increases in U.S. interest rates.
Prior to the official data from the Energy Information Administration on Wednesday, attention will turn to the most recent U.S. oil stock data due from the American Petroleum Institute industry group later in the session for additional hints on crude demand in the world’s biggest energy consumer.
U.S. oil futures were trading 0.7% higher at $76.23 per barrel by 2:00 ET, while the Brent contract increased by 0.7% to $82.59 per barrel. Both futures are expected to decline by 5% this month.
Furthermore, the price of gold futures decreased by 0.2% to $1,822.20/oz, and the EUR/USD traded 0.2% lower at 1.0589.