European stock markets are likely to open slightly lower on Wednesday, before important U.S. inflation data comes out. This data could show how the U.S. Federal Reserve plans to tighten money in the future.
At 2:00 AM ET (0600 GMT), the DAX futures contract in Germany was down 0.3%, the CAC 40 futures contract in France was down 0.1%, and the FTSE 100 futures contract in the U.K. was down 0.1%.
This week, global stock indices have been on edge as they wait for the latest U.S. consumer inflation report. Investors are looking for signs that prices are close to reaching a peak, which would give the Federal Reserve a reason to stop trying so hard to stop the highest inflation in decades.
The U.S. CPI is due at 8:30 a.m. ET (12:30 p.m. GMT), and it is expected to be 8.7% for July, which is a slight drop from the 9.1% seen in June. Even though this drop could mean that inflation has reached its peak, it would still be close to the highest level it has been in forty years.
The Fed has said that monthly drops in CPI growth would be needed before it would stop aggressively tightening monetary policy, so a big drop would be needed to change the story in a big way.
China’s consumer price indexes and producer price indexes both grew at a slower rate than expected in July. This shows that the country is still dealing with the negative effects of COVID-19 lockdowns.
Also, the German CPI went up 0.9% on a monthly basis in July, but it went down to 7.5% on a yearly basis. This shows that price pressures stayed high in Europe’s largest economy.
In business news, E.ON (ETR:EONGn), Europe’s largest energy network operator, cut the value of its stake in the Nord Stream 1 gas pipeline by about $715 million. It did this because of “increased uncertainty” about how Russia’s war in Ukraine will affect the project.
Prudential’s (LON:PRU) operating profit for the first half of the year went up by 8%, but the Asia-focused insurer warned that the rest of the year will be hard because COVID curbs are still in place in some markets.
Wednesday, oil prices went down after industry data showed a surprising rise in U.S. crude stocks. This suggested that demand might be slowing in the U.S., which is the largest consumer of oil in the world.
Data from the American Petroleum Institute, which came out late Tuesday, showed that crude oil stocks in the U.S. went up by about 2.2 million barrels last week, which was more than expected.
Official government data is due out later on Wednesday. If the number is the same, it would be the second week in a row that U.S. oil stocks were bigger than expected.
Still, losses have been small. This is because of worries about supply after Ukraine shut down a key crude pipeline from Russia to Europe on Tuesday because sanctions made it impossible to pay Moscow’s transit fee.
By 2:00 AM ET, U.S. crude futures had dropped 0.8% to $89.75 per barrel, while the Brent contract had dropped 0.7% to $95.68 per barrel.
Also, gold futures went down 0.4% to $1,804.25/oz, and EUR/USD went up a little bit to 1.0212.
