European Stocks Edge Higher; Central Bank Actions in Focus

By Peter Nurse

Investing.com — European stock markets are expected to open largely marginally higher Monday, with investors taking a breather after last week’s volatility associated with a strong U.S. jobs report, varying quarterly corporate results and the European Central Bank’s hawkish turn.

At 2:05 AM ET (0705 GMT), the DAX Futures contract in Germany traded 0.3% higher, CAC 40 Futures in France climbed 0.2% and the FTSE 100 Futures contract in the U.K. rose 0.2%.

Investors are likely to start the new week in a contemplative mood, as while Friday’s strong U.S. payrolls report soothed concerns about the global economic recovery it also added to the risk of an aggressive tightening by the Federal Reserve.

Markets have now priced in a one-in-three chance the Fed might lift interest rates by a hefty 50 basis points in March, and these expectations could be bolstered by the U.S. consumer price index on Thursday.

Back in Europe, the ECB sounded much more concerned at Thursday’s policy-setting meeting about the inflationary pressures impacting the Eurozone. 

Klaas Knot, the Dutch central bank president and a member of the ECB’s Governing Council, illustrated this concern on Sunday, saying that he expects the ECB to raise interest rates in the fourth quarter of this year.

Adding to the uncertainty is the crisis on the Ukrainian border, with White House national security adviser Jake Sullivan warning on Sunday that Russian President Vladimir Putin could order an attack within days or weeks, as diplomatic efforts to find a way out of the situation continue with French President Emmanuel Macron heading to Moscow.

The earnings season is set to continue this week, after last week’s market turmoil saw online retail giant Amazon (NASDAQ:AMZN) gain almost $200 billion in market value while Facebook-owner Meta Platforms (NASDAQ:FB) lost a similar amount.

In Europe, Aurubis AG (DE:NAFG), the region’s largest copper producer, on Monday confirmed a rise of about 85% in quarterly profits as high metal prices boosted results, while numbers from Sanofi SA (LON:0O59), Vinci SA (PA:SGEF) and Intesa Sanpaolo (MI:ISP) will be of interest.

Oil prices stabilised Monday, taking a break after surging to the highest levels since 2014 at the end of last week, recording its seventh consecutive weekly gain.

Oil has soared this year as the global economy has recovered from the Covid pandemic but supply has struggled to keep up with this improving demand, putting $100 a barrel within reach. Increased geopolitical tensions surrounding Russia’s intentions for Ukraine have also added a risk premium to the price.

By 2:05 AM ET, U.S. crude futures traded 0.2% lower at $92.13 a barrel, while the Brent contract rose 0.3% to $93.53.   

Additionally, gold futures rose 0.2% to $1,811.00/oz, while EUR/USD traded 0.1% lower at 1.1433.