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European stock futures higher; Chinese inflation data, banking sector in focus

Published 08/09/2023, 02:16 PM
© Reuters

Investing.com - European stock markets are expected to open higher Wednesday, as investors attempt to recoup recent losses while digesting more quarterly corporate earnings.

At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 0.6% higher, CAC 40 futures in France climbed 0.8% and the FTSE 100 futures contract in the U.K. rose 0.5%.

China’s inflation data disappoints

The main European indices closed lower on Tuesday, with Germany’s DAX dropping over 1%, weighed by weakness in the banking sector as well as disappointing trade data from China, a major export market for many of Europe’s largest companies.

The tone is more constructive Wednesday, although gains are likely to be constrained by the release of disappointing inflation data out of China, suggesting the world’s second-largest economy is still struggling after a dismal second quarter.

China’s consumer price index fell 0.3% in the 12 months to July, the first annual contraction in CPI since September 2021, while the producer price index shrank 4.4% in the same month.

Europe’s banks in focus

Back in Europe, the banking sector will remain in focus after the previous session’s sharp losses in the wake of the surprise announcement by the Italian government of a 40% windfall tax on its lenders.

The Italian authorities clarified the situation late Tuesday by stating that the new tax could not breach 0.1% of a lender's total assets, but investors will still be on guard for similar moves in other countries.

Corporate earnings continue to emerge

The earnings season continues Wednesday, with numbers scheduled from Dutch supermarket chain Ahold Delhaize (AS:AD) and Germany-based E.ON (ETR:EONGn), Europe's largest energy company.

Across the pond, a lot of attention will be on the numbers from Walt Disney (NYSE:DIS), with investors listening for any updates on the future of the entertainment giant’s ESPN sports channel and the movie studio's plans for navigating an ongoing writer and actor strike in Hollywood.

Crude slips on Chinese data, U.S. inventory build

Oil prices retreated Wednesday on concerns over the health of the Chinese economy, the world's largest oil importer, as well as indications of a large weekly build in U.S. inventories.

Data from the American Petroleum Institute showed that U.S. crude inventories grew by over 4 million barrels in the week to July 28, much more than expectations for a small draw.

Official inventory data from the Energy Information Administration is due later in the session, amid concerns that U.S. fuel demand may be falling as the end of the summer season approaches.

By 02:00 ET, U.S. crude futures traded 0.2% lower at $82.73 a barrel, while the Brent contract dropped 0.2% to $85.98. Both contracts gained nearly $1 the previous day.

Additionally, gold futures rose 0.3% to $1,965.30/oz, while EUR/USD traded 0.2% higher at 1.0976.

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