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European Stock Futures Lower; German Factory Orders Slump

Stock MarketsOct 06, 2021 07:44
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By Peter Nurse - European stock markets are expected to open sharply lower Wednesday on concerns high inflation, fed by increasing energy costs, will result in slowing economic growth just as central banks start to remove their monetary support.

At 2:15 AM ET (0615 GMT), the DAX futures contract in Germany traded 0.7% lower, CAC 40 futures in France dropped 0.9% and the FTSE 100 futures contract in the U.K. fell 0.8%.

There was more disappointing economic news Wednesday, as German factory orders, a normally reliable leading indicator of trends in Europe's largest economy, fell 7.7% in August, a sharp slowdown from the 4.9% gain in July. 

European investors had already received a weak handover from Asia, after New Zealand's central bank hiked interest rates by for the first time in seven years in an attempt to get on top of inflationary pressures, and signalled further tightening was to come. In Europe, Romania had become the latest emerging country to hike on Tuesday and Poland is expected to follow suit on Thursday.

Energy markets continue to create headaches for industry, with U.K. gas prices hitting a new all-time high of 330 pence a therm, around 97 euros a megawatt-hour.

Meanwhile, oil traded at multi-year highs amid global concerns about energy supply, particularly after the so-called OPEC+ bloc decided against speeding up a pre-agreed pace of output increases. 

This strength continued even after U.S. crude oil supply data showed signs of slowing fuel demand in the world’s largest consumer, after inventories increased by 951,000 barrels for the week ended Oct. 1, according to data from the American Petroleum Institute, when a draw of about 300,000 barrels had been expected.

By 2:15 AM ET, U.S. crude futures traded 0.5% higher at $79.36 a barrel, having earlier climbed to its highest level since November 2014. The Brent contract rose 0.4% to $83.01, after rising to a three-year high in the previous session.

At the same time, the International Monetary Fund on Tuesday cut its global economic growth forecast for 2021 to slightly below its July forecast of 6%, citing risks associated with debt, inflation and divergent economic trends in the wake of the Covid-19 pandemic.

In corporate news, U.K. supermarket giant Tesco (OTC:TSCDY) will be in the spotlight after it released strong half-year results, lifting its full-year profit expectations.

Additionally, gold futures fell 0.4% to $1,753.55/oz, while EUR/USD traded 0.1% lower at 1.1582.


European Stock Futures Lower; German Factory Orders Slump

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