European Stock Futures Largely Flat; Bank Earnings, U.S. Inflation in Focus

This post was originally published on this site – European stock markets are expected to open largely unchanged Thursday ahead of the release of key U.S. inflation data, with the banking sector in particular focus.

At 2 AM ET (0700 GMT), the DAX futures contract in Germany traded 0.1% lower, while CAC 40 futures in France climbed 0.3% and the FTSE 100 futures contract in the U.K. rose 0.2%.

Global investors are reluctant to push the boat out ahead of the release of the monthly U.S. inflation report due later in the day, as this should offer new clues on how aggressively the Federal Reserve will tighten monetary policy this year.

The January U.S. consumer prices release is due at 8:30 AM ET (1330 GMT), with the headline CPI seen rising 0.5% on the month and 7.3% on the year, which would be the highest level in almost 40 years.

“A 25bp Fed rate hike on 16 March is fully discounted as are five hikes by the end of the year,” said analysts at ING, in a note. The “U.S. CPI release will help determine whether the Fed starts off with a 25bp move or 50bp.”

Back in Europe, Thursday will be another busy day for quarterly earnings, with a particular focus on the region’s banking sector. 

Credit Suisse (SIX:CSGN) has tried to put a difficult 2021 to bed, posting a fourth-quarter net loss of 2 billion Swiss francs ($2.2 billion), hurt by provisions to settle its investment bank’s legal costs.

Switzerland’s second-biggest bank suffered last year a $5.5 billion trading loss from the collapse of investment fund Archegos as well as taking a hefty financial hit from the insolvency of British finance firm Greensill.

In France, Societe Generale (OTC:SCGLY) reported a near quadrupling of fourth-quarter profit on lower pandemic-related charges and a rebound in retail banking and equity trading, while Credit Agricole (OTC:CRARY) beat its 2022 profit target a year early as lower costs for troubled loans helped boost fourth-quarter results.

Elsewhere, Zurich Insurance (SIX:ZURN) posted a 35% rise in 2021 business operating profit, while ArcelorMittal (NYSE:MT), the world’s largest steelmaker, reported its biggest annual profit in more than a decade after a historic rally in steel prices.

Oil prices edged lower Thursday under pressure from the resumption of the Iran-West nuclear talks that could result in U.S. sanctions being removed from Tehran oil exports, even after the biggest weekly draw on U.S. crude oil stocks in more than three years.

Data from the Energy Information Administration showed that U.S. crude inventories fell by 4.76 million barrels during the week ended Feb. 4, the most for a week since October 2018.

The drawdown was triple that projected by industry analysts and marked the second straight weekly drop in crude stocks.

By 2 AM ET, U.S. crude futures traded 0.2% lower at $89.50 a barrel, while the Brent contract fell 0.3% to $91.28.   

Additionally, gold futures fell 0.1% to $1,835.45/oz, while EUR/USD edged higher to 1.1423.