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European Stock Futures Slip Lower; ECB Meeting in Spotlight

Stock Markets Jun 09, 2022 02:01AM ET
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By Peter Nurse

Investing.com - European stock markets are expected to edge lower at the open Thursday ahead of a key meeting of the European Central Bank, which should provide a timetable for interest rate hikes to combat soaring inflation.

At 2 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.7% lower, CAC 40 futures in France dropped 0.9%, and the FTSE 100 futures contract in the U.K. fell 0.6%.

European markets will focus on the ECB’s policy-setting meeting later in the session, with the central bank widely expected to announce an imminent end to large-scale asset purchases, paving the way for a first increase in interest rates in more than a decade next month to combat record levels of inflation.

President Christine Lagarde unveiled a plan last month to end the central bank’s very accommodative monetary policy, saying that the ECB's minus 0.5% deposit rate should start rising in July and could be at zero or "slightly above" by the end of September before rising further "towards the neutral rate."

“Market expectations for a rate hike this week are close to zero, while 25bp increases in July and September are fully in the price, in line with recent ECB communication,” said analysts at ING, in a note. “However, markets are pricing in a total of 130bp of tightening by year-end, which would imply a 50bp hike at one of the four remaining meetings - after the June one - this year.”

There is little in the way of significant economic data due for release in Europe Thursday, but late Wednesday, China released stronger-than-expected trade data, suggesting a rebound in the world’s second largest economy as it lifts its stringent COVID-19 measures.

China’s May exports grew 16.9% year-on-year, far faster than April’s growth of 3.9%, while imports in May grew 4.1% year-on-year, the first gain in three months and compared with flat growth in April.

This strong trade data helped oil prices stabilize around three-month highs, as they pointed to an economic recovery in the world’s largest crude importer.

Elsewhere, official data from the U.S. Energy Information Administration, also released Wednesday, showed a build of just over 2 million barrels of crude last week, but U.S. gasoline stockpiles dropped by 812,000 barrels, indicating fuel demand resilience during peak summer despite soaring prices.

By 2 AM ET, U.S. crude futures traded 0.1% lower at $122.05 a barrel, while the Brent contract rose 0.1% to $123.62. Both benchmarks closed Wednesday at their highest since March 8.

Additionally, gold futures fell 0.1% to $1,854.10/oz, while EUR/USD traded 0.1% higher at 1.0716.

European Stock Futures Slip Lower; ECB Meeting in Spotlight
 

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