European Stock Futures Edge Higher; German Ifo, ECB Minutes in Focus

© Reuters

By Peter Nurse

AiVIF.com - European stock markets are expected to edge higher Thursday, ahead of the start of the widely-awaited Jackson Hole economic symposium as well as the release of the minutes from the last ECB meeting and key German business sentiment data.

At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 0.4% higher, CAC 40 futures in France climbed 0.5%, and the FTSE 100 futures contract in the U.K. rose 0.3%.

There is currently a great deal of caution circulating global stock markets, and Europe is no exception, ahead of the start of the U.S. Federal Reserve’s annual gathering in Jackson Hole, Wyoming later Thursday.

Markets are bracing for the U.S. central bank to reaffirm its commitment to beating inflation, even at the expense of sending the world’s largest economy into a deep slowdown, and Fed Chair Jerome Powell's speech on Friday is likely to set the tone for months to come.

In Europe, the outlook is even more gloomy. Soaring energy prices are contributing to the likelihood of inflation climbing even higher than current historic levels while growth expectations are deteriorating.

German gross domestic product data confirmed growth of just 0.1% in the second quarter of the year in the Eurozone’s largest economy, and main growth driver, focusing attention on the release of the Ifo business climate index later in the session.

This index is expected to show a fall to 86.8 in August, down from 88.6 the previous month, adding to the signals that the continent’s most important economy is heading into a recession.

The minutes from the European Central Bank's last policy meeting are also due later Thursday. This was the meeting that saw ECB hike interest rates by a bigger than expected 50 basis points last month, and the account is likely to contain a hawkish message as the central bank attempted to curb red-hot inflation.

In corporate news, Novartis (SIX:NOVN) is likely to be in the spotlight after the Swiss drugmaker announced it would spin off Sandoz and list it on the Swiss stock exchange to create the leading European generics company.

Additionally, BP (LON:BP) was forced to close some of its units affected by an electrical fire at its important Whiting refinery in Indiana.

Oil prices edged higher Thursday, helped by ongoing supply tightness as well as signs of strong demand in the U.S., the world’s largest consumer.

Data released Wednesday by the Energy Information Administration showed that U.S. crude inventories fell by about 3.3 million barrels last week, much more than expected, while the volume of crude and its products exported from the U.S. last week was the highest in a series going back to February 1991.

The potential for the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, to cut production to support prices has also added support to the market, while talks over the revival of a nuclear deal with Iran, which could lead to exports from the Persian Gulf country hitting the global market, remain stalled.

By 02:00 ET, U.S. crude futures traded 0.5% higher at $95.39 a barrel, while the Brent contract rose 0.7% to $101.96.

Additionally, gold futures rose 0.5% to $1,770.40/oz, while EUR/USD traded 0.3% higher at 0.9995.