European Stock Futures Lower; Caution Ahead of U.S. CPI Release

© Reuters.

By Peter Nurse

AiVIF.com -- European stock markets are expected to open lower Tuesday, with investors showing caution ahead of the release of key U.S. inflation figures later in the session.

At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.2% lower, CAC 40 futures in France dropped 0.2% and the FTSE 100 futures contract in the U.K. fell 0.5%.

The timing of when central banks choose to scale back economic stimulus is a key driver of market sentiment, nowhere more so than in the U.S., the world’s largest economy and major growth driver.

One of the key factors in potentially determining the reining in of the extraordinary stimulus is soaring inflation, with U.S. producer prices having jumped 8.3% on an annual basis in August. Eyes will turn to the release of the latest U.S. consumer prices, with annual inflation expected to have eased slightly to 4.2% from 4.3% in July. The data comes ahead of a key meeting by the Federal Reserve on Sept 21-22.

The European Central Bank decided last week to slow down its emergency bond purchases in the fourth quarter, citing higher inflation, and ECB policymaker Isabel Schnabel said on Monday that the region’s central bank is ready to act if inflation does not ease as soon as next year.

Also of note, the U.K. claimant count fell by 58,600 in August, a substantial improvement from the 7,800 drop the previous month, although the unemployment rate remained at 4.6%. 

In corporate news, retailer JD Sports (NASDAQ:JD) (LON:JD) reported interim results, while online supermarket Ocado (LON:OCDO) released a trading statement. However, most eyes will be on Apple's (NASDAQ:AAPL latest virtual product launch later Tuesday, amid heightened anticipation of what the iPhone maker will offer up. 

Crude prices pushed higher Tuesday, extending recent gains as another storm threatened the output from the important U.S. Gulf of Mexico region, an area still trying to recover from the damage caused by Hurricane Ida only two weeks ago.

The offshore oil platforms were evacuated on Monday as Tropical Storm Nicholas strengthened into a hurricane, prompting President Joe Biden to declare a state of emergency for Louisiana.

More than 40% of the U.S. Gulf's oil and gas output was still offline even before Nicholas’s arrival, according to offshore regulator Bureau of Safety and Environmental Enforcement.

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 $74.03. Both benchmarks were near their highest levels since early August hit the previous day.

Additionally, gold futures fell 0.1% to $1,793.55/oz, while EUR/USD traded largely flat at 1.1809.