European Stock Futures Mostly Lower; Slowing Chinese Growth Weighs

© Reuters.

By Peter Nurse

AiVIF.com - European stock markets are expected to trade in a subdued fashion Wednesday, with weak Chinese data raising concerns about the global economic recovery.

At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded flat, while CAC 40 futures in France dropped 0.5% and the FTSE 100 futures contract in the U.K. fell 0.6%.

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.

Retail sales grew 2.5% year-on-year, a sharp drop from July’s 8.5% growth and at the slowest pace since August 2020, while industrial output grew 5.3% year-on-year, its weakest pace since July 2020.

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.

There are also inflation figures from France and Italy for August due later Wednesday, along with Eurozone July industrial production numbers.

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.

Back in Europe, the retail sector is likely to be in focus Wednesday, with the likes of H&M (ST:HMb) and Inditex (MC:ITX) releasing quarterly earnings.

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. 

Additionally, gold futures fell 0.2% to $1,803.95/oz, while EUR/USD traded 0.1% higher at 1.1807.