European Stocks Mixed; Caution Ahead of Eurozone CPI Release

This post was originally published on this site – European stock markets traded in a mixed fashion Thursday as investors digest the minutes from the last Federal Reserve meeting ahead of the final Eurozone inflation data for July.

By 03:55 ET (07:55 GMT), the DAX in Germany traded 0.4% higher, the CAC 40 in France rose 0.1%, while U.K.’s FTSE 100 traded 0.2% lower.

European equities have posted strong gains over the last month, boosted by a generally healthy quarterly earnings season, but there remains a degree of caution over the inflationary outlook and future growth.

Economic growth in the Eurozone for the second quarter was revised down on Wednesday from 0.7% to 0.6% quarter on quarter, and investors are waiting for the latest estimates of inflation in the region, due at 05:00 ET (09:00 GMT), although they aren’t expected to deviate from preliminary estimates. These were up 8.9% on the year in July, a monthly rise of 0.1%.

European Central Bank board member Isabel Schnabel said Thursday, in an interview with Reuters, that the Eurozone inflation outlook has failed to improve since its July rate hike, suggesting she would vote for another large interest rate increase next month.

The Federal Reserve is more advanced in its monetary tightening path, and minutes from the July Fed meeting, released on Wednesday, showed officials saw “little evidence” late last month that U.S. inflation pressures were easing.

That said, they did flag an eventual slowdown in the pace of hikes, but not a switch to cuts in 2023 that had been the widely held belief prior to the minutes’ release.

There still remains a great deal of uncertainty over the size of the interest rate hike when the Fed next meets in September, and this could keep stock markets in tight trading ranges ahead of next week’s central bankers get together at Jackson Hole.

In corporate news, AO World (LON:AO) stock rose 13% after the British-based online electronics retailer said it has succeeded in stabilizing its business outlook after a rocky year marked by a failed attempt to crack the German market.

Adyen (AS:ADYEN) stock fell 11% after the Dutch payments company reported deteriorating margins in the second quarter following a hefty rise in operating expenses. (LON:MADE) stock fell 8.9% after the struggling online furniture retailer confirmed that it is exploring a potential round of share sales to boost its balance sheet.

Oil prices held steady Thursday as traders weighed up falling U.S. stockpiles with concerns about a global slowdown.

U.S. crude stocks fell by a hefty 7.1 million barrels in the week to Aug. 12, Energy Information Administration data showed on Wednesday, much more than expected, while exports rose to a record and gasoline demand climbed to the highest this year.

Still, the market is on track for a weekly loss as fears over an economic downturn continue to hang over the market. The potential for the revival of the 2015 nuclear deal, and thus more oil from Iran, has added to the bearish sentiment.

By 03:55 ET, U.S. crude futures traded 0.1% lower at $88.06 a barrel, while the Brent contract rose 0.1% to $93.72.

Additionally, gold futures traded flat at $1,776.65/oz, while EUR/USD traded 0.2% lower at 1.0163.