Investing.com – European stock markets are expected to open lower Tuesday, continuing the negative start to the week with investors fretting about a worsening energy crisis ahead of the release of a highly-anticipated U.S. inflation report.
European indices closed mostly lower Monday, with the DAX ending 1.4% lower, for example, as investors awaited the release of this week’s key U.S. inflation data.
Global stock markets have suffered this year as a number of central banks, and the U.S. Federal Reserve in particular, have started aggressively raising interest rates to try and rein in rampant inflation.
Such a release would likely give the green light to the Fed to hike by 75 basis points later this month, matching June’s increase, which was the biggest increase by the U.S. central bank since 1994.
Also dragging on sentiment are fears of worsening of the global energy crisis as the biggest pipeline carrying Russian gas to Germany began 10 days of annual maintenance. Fears are growing that the shutdown might be extended, especially as the European Union is preparing to impose a phased embargo on Russian oil and ban maritime insurance for any tanker that carries Russian oil.
The main economic data release scheduled for Tuesday is the ZEW economic sentiment index for July from Germany, which is expected to weaken substantially as growth slows in Europe’s leading economy.
Oil prices fell Tuesday as fresh COVID restrictions in China, the world’s biggest importer of crude, weighed heavily on demand expectations.
Several Chinese cities are adopting fresh curbs to attempt to stop the spreading of the highly infectious BA.5 Omicron subvariant of the COVD-19 virus, with close to 30 million people now under some form of movement restrictions.
Strict lockdowns earlier in the year, primarily in the commercial hub of Shanghai, had a significant impact on the country’s economic activity and thus the demand for crude.