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European Stock Futures Higher; ECB Meeting Looms Large

Published 07/18/2022, 01:54 AM
Updated 07/18/2022, 01:55 AM
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By Peter Nurse 

Investing.com - European stock markets are expected to open higher Monday, helped by a bounce on Wall Street, but investors will be on edge ahead of a key meeting of the European Central Bank later in the week.

At 02:00 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.9% higher, CAC 40 futures in France climbed 1%, and the FTSE 100 futures contract in the U.K. rose 0.6%.

The main U.S. indices closed sharply higher on Friday, with the blue-chip Dow Jones Industrial Average gaining over 650 points, or 2.2%, as investors bet that the Federal Reserve will be less aggressive at its upcoming meeting, potentially lifting interest rates by the 75 basis points it hiked in June and not by the 100 basis points that looked likely after consumer inflation soared to 9.1% in June.

Back in Europe, the European Central Bank meets on Thursday. This gathering is expected to see the bank raise rates for the first time in a decade as it attempts to curb soaring inflation, the latest illustration of which is due on Tuesday with Eurozone CPI numbers for June.

Beyond the interest rate decision and ECB President Christine Lagarde’s press conference, the meeting is expected to shed light on the bloc’s new tool to keep country-level bond yields from spiraling too high.

Also creating tensions in Europe are worries over whether Russia resumes the flow of gas through the Nord Stream 1 pipeline, while Italy teeters on the brink of political turmoil should Prime Minister Mario Draghi press ahead with his resignation.

In corporate news, Nordea (HE:NDAFI), the Finnish bank, posted a rise in second-quarter operating earnings, well above market expectations aided by growth in earned loan interests.

Additionally, Haleon is set to start trading as an independent, listed company, after GSK (LON:GSK) shareholders approved the demerger of its consumer health-care business.

Oil prices rose Monday, helped by the continuing tight global supply after U.S. President Joe Biden's trip to Saudi Arabia failed to yield any pledge from the top OPEC producer to boost oil supply.

Attention this week will be on the scheduled resumption of Russian gas flows to Europe via the Nord Stream 1 pipeline on July 21, when the current maintenance stoppage is due to end, amid fears the shutdown may be extended because of the war in Ukraine.

That said, the prospect of widespread COVID-19 lockdowns in China again reducing fuel demand has limited the gains, with Shanghai rolling out mass-testing in nine districts while the gaming region of Macau extended its lockdown. 

By 02:00 AM ET, U.S. crude futures traded 1.1% higher at $95.63 a barrel, while the Brent contract rose 1.3% to $102.48. The benchmarks last week posted their biggest weekly drops in about a month on fears of a recession that will hit oil demand.

Additionally, gold futures rose 0.6% to $1,713.05/oz, while EUR/USD traded flat at 1.0086.

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