European Stock Futures Mixed; US CPI Release in Focus By

© Reuters.

By Peter Nurse – European stock markets are expected to open in a mixed fashion Tuesday, with investors cautious ahead of the release of US inflation data that will offer a crucial guide to the Federal Reserve’s interest rate outlook.

At 02:00 ET (06:00 GMT), the contract in Germany traded 0.3% lower, while in France climbed 0.1%, and the contract in the UK rose 0.1%.

Economic data are likely to set the tone Tuesday, with the UK rising 6,300 in August, a disappointing number, but the falling to 3.6% from 3.8%, suggesting the country’s labor market remained healthy despite the headwinds associated with rising prices.

German rose 0.3% on the month in August, a slowing in growth from 0.9% the previous month, but the still climbed to 7.9% from 7.5%.

These German inflation numbers are likely to point to an ugly survey later in the session. However, they are still likely to be overshadowed by the release of the US data, due at 08:30 ET (12:30 GMT), as the numbers will frame the Fed’s policy meeting next week and set the tone for weeks to come.

Expectations are for a slowdown in headline CPI, thanks to energy and commodity prices backing down from peaks, but for core prices to remain elevated.

The markets are currently factoring in roughly a 90% chance that the benchmark interest rate will be raised by 75 basis points at next week’s policy meeting.

In corporate news, UBS (SIX:) will be in the spotlight Tuesday after the Swiss banking group announced plans to increase its dividend and anticipates its share repurchases will exceed $5 billion for 2022.

Oil prices edged lower Tuesday ahead of the release of not only the US inflation data, which will likely impact the , but also the OPEC’s monthly outlook.

The Organization of Petroleum Exporting Countries and its allies agreed last week to reduce crude production, and traders will look to the report, due later in the session, for more cues on global demand.

Crude hit the lowest level since January last week on concerns over global growth, including in top importer China, where renewed COVID-19 restrictions are impacting activity.

By 02:00 ET, futures traded 0.1% lower at $87.66 a barrel, while the contract fell 0.2% to $93.79.

Additionally, fell 0.5% to $1,732.05/oz, while traded 0.2% higher at 1.0138.

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