By Peter Nurse
Investing.com - European stock markets traded higher Wednesday, continuing the global rally on the back of healthy corporate earnings and growing confidence of the expected resumption of Russian gas supply to Europe, easing fears of a regional energy crisis.
By 03:50 AM ET (0750 GMT), the DAX in Germany traded 0.1% higher, the CAC 40 in France rose 0.3%, and the U.K.’s FTSE 100 was up 0.5%.
European markets have received a positive handover from Asia following on from sharp gains on Wall Street as stronger than expected quarterly corporate earnings diluted fears aggressive monetary tightening would weigh heavily on companies’ bottom lines.
Netflix (NASDAQ:NFLX) added to the confidence, reporting its second quarter numbers after the close. The streaming giant is predicting it would return to customer growth this quarter after losing 970,000 subscribers in the quarter, much better than the 2 million it had previously projected.
Back in Europe, Russian gas flows via the Nord Stream 1 pipeline are likely to restart on time on Thursday after the completion of scheduled maintenance, Reuters reported citing sources, easing investors' concerns about gas supply to Europe.
Still, gains are likely to be limited as investors await Thursday’s important European Central Bank meeting, which is widely expected to result in the central bank’s first interest rate hike since 2011.
Policymakers signaled at the last meeting in June that a quarter-point hike was likely this time around, but there still is an air of uncertainty surrounding the gathering after a Reuters report on Tuesday suggested the ECB was weighing a 50-basis-point rate hike with Eurozone inflation running at a hefty 8.6% on an annual basis.
That’s still lower than in the U.K., as consumer prices rose 9.4% in June on an annual basis, up from the previous month’s 9.1%, and climbing at its fastest pace in 40 years.
The numbers put fresh pressure on the Bank of England to hike interest rates more aggressively, despite the obvious slowdown in the U.K. economy in recent months.
In corporate news, Akzo Nobel (OTC:AKZOY) stock fell 1.7% after the Dutch paints maker reported weaker-than-expected quarterly core earnings, citing new coronavirus restrictions in China and slowing demand for decorative paints in Europe.
ASML Holding (NASDAQ:ASML) stock fell 1.3% after the Dutch semiconductor equipment maker lowered its full-year sales growth outlook, warning of delayed shipment revenues and an uptick in costs.
Royal Mail (LON:RMG) stock fell 5% after the delivery service is considering to separate the units of Royal Mail and GLS if Royal Mail’s performance in the U.K. doesn’t improve.
Oil prices slipped lower Wednesday as industry data pointed to weakening demand in the U.S., the largest consumer in the world.
Numbers from the American Petroleum Institute on Tuesday showed U.S. stocks of crude rose by 1.86 million barrels during the week to July 15, while gasoline inventories rose by 1.29 million barrels during the week, following on from an increase of 2.9 million barrels the previous week.
The back-to-back increases in inventories, even during the busy summer driving season, suggest demand for fuel could be ebbing, and throws the official release from the U.S. Energy Information Administration later in the session firmly into focus.
By 03:50 AM ET, U.S. crude futures traded 1.6% lower at $99.14 a barrel, while the Brent contract fell 1.3% to $105.95.
Additionally, gold futures fell 0.3% to $1,705.85/oz, while EUR/USD traded 0.1% higher at 1.0229.