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European Stock Futures Higher; U.K. Retail Sales Boost Confidence

Stock MarketsJan 11, 2022 02:01AM ET
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By Peter Nurse - European stock markets are expected to open marginally higher Tuesday helped by strong U.K. retail sales data, although gains are likely to be limited as attention remains on the likely timing of U.S. monetary policy normalization.

At 2 AM ET (0700 GMT), the DAX futures contract in Germany traded flat, CAC 40 futures in France climbed 0.8% and the FTSE 100 futures contract in the U.K. rose 0.3%.

U.K. retail sales jumped in December, growing 4.6% compared with December 2019, the British Retail Consortium said Tuesday. Another report from Barclaycard showed consumer spending was up 12.2% last month from two years before.

The reports have created a degree of optimism that the U.K. economy, one of the hardest hit by the Covid pandemic, may be weathering the Omicron variant better than the previous iterations of the virus.

Still, the major focus this week will be on the latest U.S. inflation data and what this means for the pace at which the Federal Reserve will normalize its monetary policy by, hiking interest rates and shrinking its balance sheet.

Ahead of Wednesday’s CPI release, which is expected to show the headline figure breaking above 7% year-on-year, Fed Chairman Jerome Powell is set to speak at his nomination hearing later in the day. 

The spread of the Omicron variant of the Covid-19 virus shows few signs of slowing down, with the United States reporting 1.35 million new coronavirus infections on Monday, according to a Reuters tally, the highest daily total for any country in the world. China meanwhile locked down Anyang, a city of some 5 million inhabitants, after discovering local transmission of the Omicron variant, adding to restrictions in place at Xi'an and Tianjin, the world's fourth-largest port.

On the brighter side, a number of European governments are now relaxing Covid-19 rules to keep hospitals, schools and emergency services going, an acknowledgement that the Omicron variant is less dangerous than previous dominant strains.

In corporate news, Volkswagen (DE:VOWG_p) could be in the spotlight Tuesday after the German auto giant blamed supply chain constraints for only selling 70,625 of its ID electric vehicles in China last year, missing its goal of selling 80,000 to 100,000 cars.

Construction chemicals maker Sika (SIX:SIKA) posted its highest ever annual sales figure in 2021, boosted by a raft of acquisitions and the upturn in the building industry after pandemic closures the year before.

Oil prices edged higher after two days of losses with the globe’s major suppliers continuing to struggle to increase output to match recovering demand.

There have been supply outages in producers like Kazakhstan and Libya in recent days, adding to longer-term problems among OPEC and its allies in increasing production as they have promised in recent meetings. 

The market is waiting on U.S. oil and product inventory data from the American Petroleum Institute, an industry group, later Tuesday, followed by data from the U.S. Energy Information Administration on Wednesday.

By 2 AM ET, U.S. crude futures traded 0.5% higher at $78.62 a barrel, while the Brent contract rose 0.3% to $81.13. 

Additionally, gold futures rose 0.5% to $1,807.20/oz, while EUR/USD traded 0.1% higher at 1.1337.


European Stock Futures Higher; U.K. Retail Sales Boost Confidence

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