European stock markets are expected to open marginally lower Thursday as investors digest the region’s growing inflationary pressures as well as Thyssenkrupp’s quarterly report.
At 2:05 AM ET (0705 GMT), the DAX futures contract in Germany traded flat, CAC 40 futures in France dropped 0.1% and the FTSE 100 futures contract in the U.K. fell 0.1%.
The major equity indices in Europe have pushed close to record levels, boosted by strong corporate earnings, but concerns are growing about the region’s inflationary outlook and the impact this could have on monetary policy.
Eurozone inflation surged 4.1% year-on-year in October, data revealed Wednesday, more than twice the European Central Bank's target. At the same time, the equivalent U.K. number came in at 4.2%, its highest in almost a decade.
The ECB has repeatedly said that these price pressures should ease next year, but is coming under increased pressure to abandon its ultra easy monetary policy and tackle price growth.
Its own Financial Stability Review warned on Wednesday that increasingly stretched prices in property and financial markets, risk-taking by non-banks and elevated borrowing pose a threat to the region’s stability.
Over in the U.K., the Bank of England is widely expected to become the first of the major central banks to raise interest rates in the wake of the pandemic, probably in December.
Meanwhile, the quarterly corporate earnings season continues, with Thyssenkrupp (DE:TKAG) predicting its operating profit could more than double next year as its recovery continues. The German engineering and steel group also indicated it is considering listing its hydrogen unit in an initial public offering.
Earnings from the likes of the Royal Mail (LON:RMG) and National Grid (LON:NG) will also be studied, while Holcim (SIX:HOLN), the world's largest cement maker, has unveiled its 2025 strategy, which included plans to expand its solutions and products business and lower its carbon footprint.
The day’s major economic data release comes from the U.S., with the weekly initial jobless claims numbers set to provide another look at the state of the country’s labor market.
Crude prices fell overnight, continuing the sharp losses of the previous session, following a Reuters report that the U.S. is trying to arrange a coordinated release of strategic reserves by a number of major crude consumers in order to bring prices down.
China's state reserve bureau confirmed Thursday that it was working on a release of crude oil reserves.
U.S. oil inventories fell by 2.1 million barrels last week, according to data released Wednesday by the U.S. Energy Information Administration, which came as something of a surprise to a market expecting a build of 1.4 million barrels.
By 2:05 AM ET, U.S. crude futures traded 0.8% lower at $76.94 a barrel, after dropping 3% during the last session, while the Brent contract fell 0.6% to $79.81, after falling 1.7% on Wednesday.
Both benchmarks recorded their lowest settlement levels since early October.
Additionally, gold futures rose 0.2% to $1,866.80/oz, while EUR/USD traded flat at 1.1317.