European stocks experienced a rather uneventful day of trading on Tuesday, as investors grappled with limited data and the observance of a U.S. holiday. In the early morning hours, the German DAX index remained unchanged, while France’s CAC 40 saw a modest 0.1% increase. Meanwhile, the UK’s FTSE 100 showed little movement.
With a light economic calendar and the United States celebrating Independence Day, there was a dearth of data to guide investor sentiment. However, Germany did release its export and import numbers for May, revealing a 0.1% decline in exports compared to the previous month. This downturn reflects the challenging trading environment that Europe’s manufacturing powerhouse is currently facing.
Adding to the concerns, the eurozone’s manufacturing activity data for June disappointed, as surveys indicated that factory activity contracted in all four of the region’s largest economies. The European Central Bank’s persistent policy tightening has taken a toll on the manufacturing sector.
In corporate news, Ryanair, the prominent Irish low-cost carrier, achieved a significant milestone by flying a record-breaking 17.4 million passengers in June. This remarkable feat represented a remarkable 9% increase compared to the same period last year. Despite having to cancel over 900 flights and impacting around 160,000 customers due to air traffic control strikes, Ryanair managed to demonstrate its resilience.
Elsewhere, J Sainsbury, a major UK supermarket, reported a like-for-like revenue gain of 9.8% in the first quarter. The company decided to maintain its previous full-year guidance while announcing substantial price reductions on household staples. This move aimed to address customer demand for lower prices on essential items.
Shifting our focus to China, investors are closely monitoring the ongoing trade tensions between Beijing and the West. China recently announced restrictions on the exports of certain metals widely used in the semiconductor industry. This development adds another layer to the trade war, as the United States is also preparing to limit Chinese companies’ access to cloud computing services, including those provided by Amazon and Microsoft.
In Australia, the Reserve Bank decided to keep its cash rate at an 11-year high of 4.10%. This decision allows them more time to evaluate the impact of the 400 basis points of rate hikes implemented since May last year. However, the central bank cautioned that additional tightening measures might be necessary to curb inflation.
The year has been heavily influenced by aggressive monetary tightening by major central banks, including the European Central Bank. These actions have significantly shaped trading sentiment throughout various markets.
Turning our attention to the oil market, prices experienced an upward trend on Tuesday. Traders weighed the effects of supply cuts from Saudi Arabia and Russia against signs of weakening economic activity worldwide. Saudi Arabia extended its 1 million barrels per day cuts until August, potentially prolonging them further, while Russia announced a reduction of its oil exports by 500,000 barrels per day.
Nevertheless, any gains in oil prices are anticipated to be limited due to the absence of activity in U.S. markets and the weak manufacturing activity readings reported in the United States, Germany, and China on the previous day.
As of 03:30 ET, U.S. crude futures registered a 0.8% increase, reaching $70.36 per barrel, while the Brent contract climbed 0.8% to reach $75.25 per barrel. Additionally, gold futures experienced a 0.3% rise, reaching $1,934.35 per ounce, and the EUR/USD pair remained marginally lower at 1.0908.
