European Stock Futures Weaken as Attention Shifts to Debt Agreement and Spanish Inflation
European stock markets are poised to open slightly lower on Tuesday as investors eagerly await the progress of the U.S. debt ceiling agreement in Congress. At 02:00 ET (06:00 GMT), the German DAX futures contract showed a 0.1% decline, French CAC 40 futures dropped by 0.1%, and the UK FTSE 100 futures contract fell by 0.2%.
Over the weekend, President Joe Biden and House Majority Leader Kevin McCarthy reached an agreement to extend the federal debt ceiling, amounting to $31.4 trillion, until January 2025. This agreement includes spending caps and reductions in government programs. However, concerns about the agreement’s fate in the divided Congress have tempered the initial optimism of avoiding a U.S. debt default.
Meanwhile, attention in Europe is focused on the Spanish inflation reading for May, which is anticipated to show a 4.4% year-on-year increase, up from 4.1% in the previous month. This continued rise in prices is likely to put pressure on the European Central Bank to maintain tighter interest rates, potentially impacting future economic activity.
Adding to the European landscape, Spanish Prime Minister Pedro Sanchez has called for a snap election next week, surprising many in an effort to keep his Socialist party in power after a regional election defeat.
In the energy market, oil prices retreated after earlier gains driven by optimism about the U.S. debt ceiling agreement. The oil market was influenced by a stronger dollar and concerns about China’s sluggish economic recovery, which has had a significant impact as the world’s largest crude importer. Traders are now closely monitoring manufacturing and service sector data for May, scheduled for release on Wednesday, to gauge the strength of the Chinese recovery.
The oil market was further weakened by a stronger dollar, making crude more expensive for international buyers. Additionally, concerns about higher U.S. inflation, indicated by recent data, have pointed toward potential interest rate hikes by the Federal Reserve.
As of 02:00 ET, U.S. crude futures were down 0.6% at $72.26 per barrel, while the Brent contract showed a decline of 0.8% to $76.48.
In the precious metals market, gold futures saw a decrease of 0.6% to $1952.00 per ounce, and the EUR/USD currency pair traded 0.3% lower at 1.0690.
