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European stock futures slip lower; German consumer prices remain elevated

Published 02/22/2023, 03:16 PM
© Reuters.

By Peter Nurse 

Investing.com - European stock markets are expected to open lower Wednesday, as investors digest key German inflation data ahead of the release of the minutes from the U.S. Federal Reserve. 

At 02:00 ET (07:00 GMT), the DAX futures contract in Germany traded 0.2% lower, CAC 40 futures in France dropped 0.1%, while the FTSE 100 futures contract in the U.K. fell 0.4%.

The latest economic activity data in both Europe and the United States has pointed to an unexpected pick-up in business activity this month, but equity markets have reacted negatively as this suggests inflation may be more difficult to tame, cementing the case for higher interest rates.

German consumer prices rose 1.0% on the month in February, after falling 0.8% the prior month, resulting in the annual figure climbing 8.7%, above January’s 8.6%.

Italian inflation figures are also expected later in the session, and the country’s consumer price index is expected to remain in double figures on an annual basis. 

Across the pond, the minutes from the Fed’s meeting earlier this month are expected later Wednesday, and will be studied carefully for signs on how high policymakers project interest rates will climb after recent data showed robust retail sales, stronger-than-expected U.S. employment and sticky inflation.

Earlier in the day. the Reserve Bank of New Zealand lifted its interest rates by 50 basis points to 4.75%, its highest level since late 2008, and flagged more increases as inflation remained elevated.

In the corporate sector, Rio Tinto (LON:RIO) will be in the spotlight after the U.K.-listed miner more than halved its dividend while reporting a hefty drop in annual profit as iron ore prices fell on slower demand, particularly from China.

Danone (EPA:DANO) reported stronger than expected sales growth in the last quarter of 2022, as the French food company was able to raise prices in the face of soaring raw materials and energy costs.

Quarterly results from the likes of Iberdrola (BME:IBE), Telefonica (BME:TEF), Ferrovial (BME:FER) and Lloyds Banking Group (LON:LLOY) will also be in focus.

Oil prices drifted lower Wednesday on concerns higher interest rates will hit economic activity in the U.S., the largest consumer in the world, and thus fuel demand.

U.S. crude inventory data from the American Petroleum Institute, a day later than usual after Monday’s holiday, are due later in the session, and are expected to show another build, exacerbating the demand worries. 

By 02:00 ET, U.S. crude futures traded 0.6% lower at $75.94 a barrel, while the Brent contract fell 0.5% to $82.68. 

Additionally, gold futures rose 0.1% to $1,843.95/oz, while EUR/USD traded 0.1% higher at 1.0659.

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