Investors are getting ready for the start of the region’s quarterly earnings season, with a focus on the retail sector, which means that European stock markets are likely to open higher on Wednesday.
At 02:00 ET (07:00 GMT), the DAX futures contract in Germany was trading 0.3% higher, the CAC 40 futures contract in France was up 0.2%, and the FTSE 100 futures contract in the United Kingdom was up 0.2%.
On Wednesday, J. Sainsbury (LON:SBRY) and JD Sports (LON:JD) will release their quarterly results. This will bring attention to the retail industry.
As the growth of major European economies slows down, consumer demand is expected to fall in 2023. This will be a big problem for the industry.
The Bank of England has already acknowledged that the U.K. economy is in recession, and the World Bank has lowered its prediction for global growth this year to 1.7%, from 3% in June.
A 1.7% growth rate would make this year one of the worst in the last three decades.
Aside from this, Swiss chemicals manufacturer Sika (SIX:SIKA) announced a 13.4% increase in full-year sales, as new facility openings and acquisitions enabled the firm achieve its annual sales target of CHF 10 billion ($1 = CHF 0.9211) for the first time.
Bloomberg said that activist investor Bluebell Capital Partners has bought stock in Bayer (ETR:BAYGN) and is pushing for the German pharmaceutical and agribusiness giant to be broken up.
The Spanish industrial production and Italian retail sales for November are on the European economic calendar for Wednesday, but this week’s focus will be on Thursday’s news about the U.S. consumer price index.
The data will probably show that headline inflation was 6.5% in December, down from 7.1% in November. This will allow the Federal Reserve to slow down the rate of interest rate increases again in February.
In his address on Tuesday, Fed president Jerome Powell made no direct mention of the level of U.S. interest rates, but he did indicate that the U.S. central bank is preparing for political pushback as its efforts to reduce inflation impact economic development.
Oil prices declined on Wednesday following a huge increase in crude and gasoline stocks in the United States, which sparked demand concerns in the world’s top consumer.
The American Petroleum Institute said late Tuesday that crude oil stocks in the U.S. went up by 14.9 million barrels last week, which was not what was expected. There also seemed to be a small amount of oil released from the Strategic Petroleum Reserve.
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Also, distillate supplies grew by about 1.1 million barrels. Distillate supplies include heating oil and jet fuel.
The U.S. Energy Information Administration is expected to release official inventory data Wednesday evening. Traders will be waiting for confirmation of this unexpected release.
By 02:00 E.T., U.S. crude futures traded 0.8% lower at $74.50 per barrel, while Brent futures declined 0.7% to $79.54 per barrel.
In addition, gold futures increased 0.5% to $1,886.20/oz, while EUR/USD jumped 0.2% to 1.0752.