By Peter Nurse
Investing.com - European stock markets are expected to open higher Wednesday, taking their lead from gains in Asia rather than the weak close on Wall Street, ahead of key inflation data and an update from the Federal Reserve.
At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.4% higher, CAC 40 futures in France climbed 0.1% and the FTSE 100 futures contract in the U.K. rose 0.4%.
Asian markets pushed higher earlier Wednesday, bouncing after recent losses with sentiment boosted by the decision of the Reserve Bank of New Zealand to keep interest rates unchanged despite expectations of a hike.
Wall Street had closed sharply lower overnight, with the blue chip Dow Jones Industrial Average dropping more than 280 points, or 0.8%, after U.S. July retail sales disappointed, raising worries of a slowing economic recovery.
Back in Europe, although confidence has been shaken by signs of slowing global growth, the ongoing Covid-19 pandemic and the political turmoil in Afghanistan, the focus is likely on the release of inflation data for July.
U.K. consumer prices rose 2.0% year-on-year, sharply slowing from the 2.5% growth seen during the previous month and lessening the pressure on the Bank of England to tighten monetary policy.
Eurozone's inflation rate for last month is expected later in the session, and is expected to remain at 2.2% on the year.
Also of interest will be the release of the minutes from the Federal Reserve’s July meeting, at 2 PM ET (1800 GMT), with investors looking for clues over the U.S. central bank’s thinking over when it can start reining in its massive bond-buying program.
In corporate news, the retail sector will again be in focus Wednesday with U.S. giants Target (NYSE:TGT) and Lowe’s (NYSE:LOW) reporting before the start of trading on Wall Street. This follows on from Walmart (NYSE:WMT) and Home Depot (NYSE:HD) offering up their second-quarter earnings on Tuesday, which showed consumers easing up on their purchases of goods as the economy reopened.
Elsewhere, oil prices edged higher Wednesday, attempting to rebound after four days of declines, but the spread of the delta coronavirus variant, particularly in China, and the associated impact on mobility is likely to cap any gains.
Investors will keep a wary eye on the latest crude oil supply data from the U.S. Energy Information Administration, due later in the day, after the American Petroleum Institute, an industry body, reported a draw of just over 1 million barrels for the week ending Aug. 13.
The EIA reported earlier this week that U.S. shale oil production is expected to rise to 8.1 million barrels a day in September, the highest since April 2020. It's currently just over 7,9 million barrels a day.
By 2:05 AM ET, U.S. crude futures traded 0.2% higher at $66.50 a barrel, while the Brent contract rose 0.3% to $69.21.
Additionally, gold futures rose 0.3% to $1,793.10/oz, while EUR/USD traded 0.1% higher at 1.1714.