After losses earlier in the week, European stock markets are expected to open Thursday mostly a little bit lower. Investors are still worried about the effects of tightening monetary policy as economic growth slows, though.
At 02:00 ET (06:00 GMT), the DAX futures contract in Germany was down 0.4%, the CAC 40 futures contract in France was down 0.2%, and the FTSE 100 futures contract in the U.K. was mostly flat.
Small gains on Wall Street late Wednesday and in Asia overnight will help European stocks in the short term, but it’s unlikely that they will recover in a big way soon.
For the first time since the pandemic lockdown in the middle of 2020, consumer confidence in the UK went down. YouGov, a company that does market research, said that its reading of consumer sentiment dropped by 4.2 points in August, to 98.8. This is because people are worried that their living standards are getting tighter.
Related: European stock futures go down, and a surprise rise in U.S. inflation weighs on sentiment.
Policymakers in Europe have to find a way to deal with high energy costs and rising inflation without causing their economies to slow down too much.
At the moment, the fight against inflation is the most important thing on their minds. On Thursday, the European Central Bank raised interest rates by a big 75 basis points, just a few weeks after raising them by 50 basis points, and it promised to take several more steps in the coming months.
In light of this, Barclays thinks that Europe will go into a recession in the first half of 2023. The U.K. bank predicts that the economy of the Eurozone will shrink by more than 1% over the course of the year.
Inflation data for France is due out later in the day. The annual rate is expected to drop to 5.8% in August from 6.1% in July, but the month-to-month rate is expected to rise from 0.3% to 0.4%.
Hot inflation data in the U.S. earlier in the week made it likely that the Federal Reserve would raise interest rates next week by a large amount, which weighed heavily on stocks around the world at the time.
In business news, Novartis (SIX:NOVN) will be in the spotlight after the Swiss drug company said that the country’s competition commission is looking into how it uses patents.
Oil prices stabilised on Thursday, trading in tight ranges after data from the Energy Information Administration showed that crude inventories in the U.S., the world’s biggest consumer, rose more than expected last week. This suggests that fuel demand is weakening.
But the International Energy Agency’s report on Wednesday has helped bring the market back into balance. The report said that the organisation expects a large number of people to switch from gas to oil for heating, saying that this will happen on average at 700,000 barrels per day from October 2022 to March 2023, which is twice as much as a year ago.
Related: European stocks go up at the start of the day, and good news about deals helps Aveva and Schneider.
By 02:00 ET (06:00 GMT), U.S. crude futures had gone up 0.1% to $88.52 a barrel, while the Brent contract had gone down 0.1% to $94.02.
Also, gold futures dropped 0.7% to $1,697.45/oz, and EUR/USD fell 0.2% to 0.9962.
