European stock markets are expected to trade in a subdued fashion Wednesday, with weak Chinese data raising concerns about the global economic recovery.
A salvo of economic data from China earlier Wednesday suggested that the world’s second largest economy, and the main regional growth driver, hit a speed bump in August thanks to Covid-19 outbreaks and supply disruptions.
The data dump continued in Europe Wednesday, with U.K. consumer prices rising 3.2% on the year in August, a sharp rise from July’s 2.0%, increasing the pressure on the Bank of England to consider reining in its monetary stimulus.
This all follows the release Tuesday of a smaller-than-expected rise in U.S. inflation for the month of August, creating more uncertainty over the timing of the Fed’s tapering of asset purchases.
Crude prices strengthened Wednesday, boosted by a larger than expected drawdown in U.S. crude stocks coupled with expectations of a substantial recovery in demand as countries get on top of the recent Covid-19 outbreak.
Crude oil supply data from the American Petroleum Institute, released late Tuesday, showed a hefty draw of 5.4 million barrels last week, after Hurricane Ida shut numerous refineries and offshore drilling production.
Investors now await crude oil supply data from the U.S. Energy Information Administration, due later in the day, for confirmation.
Additionally, the International Energy Agency predicted on Tuesday that Covid-19 vaccine rollouts could drive an economic rebound, resulting in a sharp jump in demand of 1.6 million barrels a day
next month, with continued growth to the end of the year.
By 2:05 AM ET, U.S. crude futures traded 0.7% higher at $70.98 a barrel, while the Brent contract rose 0.7% to $74.13.