By Peter Nurse
Investing.com - European stock markets are expected to open higher Tuesday, rebounding to a degree from the previous session’s sharp losses, as investors digest key quarterly results from the banking sector. However, gains will be limited by concerns of slowing global growth and sharp monetary policy tightening.
At 2 AM ET (0600 GMT), the DAX futures contract in Germany traded 1.6% higher, CAC 40 futures in France climbed 1.6% and the FTSE 100 futures contract in the U.K. rose 1.1%.
European equity indices closed significantly lower Monday, with the DAX falling 1.5% and the CAC 40 just over 2%, but are expected to benefit Tuesday from the late revival on Wall Street, led by the tech-heavy Nasdaq Composite.
Twitter (NYSE:TWTR) was a major focus as it finally confirmed it had accepted Elon Musk’s $44 billion offer to take the social media platform private. There are some significant earnings releases from the important sector this week, with both Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) reporting after the close Tuesday.
Back in Europe, it’s the banking sector that will be to the fore, as lending giants HSBC (LON:HSBA) and UBS (SIX:UBSG) both published quarterly results.
HSBC, Europe’s largest bank, posted a pretax profit of $4.2 billion for the first quarter, ahead of market expectations but this still represented a 27% drop from a year ago. The lender also said further buybacks were unlikely this year, citing rising inflation and economic uncertainty due to the Russia-Ukraine conflict.
UBS fared better, posting a 17% rise in first-quarter net profit to $2.14 billion, beating expectations for a fall in profit amidst uncertainties over the war in Ukraine, thanks to strong trading.
Banco Santander (BME:SAN), Spain’s biggest lender, beat net income expectations in the first quarter, helped by growth in its lending revenue.
Elsewhere, Swiss drugmaker Novartis (SIX:NOVN) posted a 3% rise in core operating income, helped by sales growth from new drugs, while Orange (EPA:ORAN), France's biggest telecoms operator, said its first-quarter core operating profit grew 1%.
Still, sentiment remains fragile as the stringent lockdown in Shanghai, dragging into its fourth week, as well as the spreading of Covid-19 cases to other big Chinese cities like Beijing, is weighing on the economic growth outlook.
Additionally, investors remain concerned about whether the global economy can withstand the increasingly hawkish pivot from a number of key central banks, in particular the Federal Reserve.
Meanwhile, the war in Ukraine enters its third month, with Russian troops continuing to attack the Azovstal steel plant in the southeastern port city of Mariupol, where some 2,000 Ukrainian fighters are holding out.
Oil prices rebounded Tuesday from the sharp losses of the previous session, but concerns remain that more Covid-19 lockdowns in China will hit demand for crude from the world’s largest importer.
By 2 AM ET, U.S. crude futures traded 1% higher at $99.56 a barrel, while the Brent contract rose 1.3% to $103.49. Both benchmarks dropped around 4% on Monday.
Additionally, gold futures rose 0.5% to $1,906.30/oz, while EUR/USD traded 0.1% higher at 1.0726.