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Title: European Stock Futures Higher; German Ifo Index Due

May 23, 2022 02:00AM ET

By: AnalysisWatch

European stock markets are expected to open higher on Monday, thanks to rising risk sentiment, despite concerns about inflation and rising interest rates weighing on the global economic outlook.

At 2 a.m. ET DAX futures in Germany were up 1.1 percent, CAC 40 futures in France up 1.1 percent and FTSE 100 futures in the UK up 0.8 percent.

The expected gains in Europe came after regional indices closed higher on Friday after a volatile and mostly negative week, helped by China's easing of its benchmark interest rate.

However, uncertainty remained amid fears that inflationary pressures could be exacerbated by the ongoing war in Ukraine, related tightening by central banks, particularly the Federal Reserve, and slowing economic growth.

German wholesale inflation data released on Friday showed a higher-than-expected increase, suggesting that prices will remain elevated in the short term.

This may also be reflected in the Ifo business climate index for May, which will be released later in the session. The index is expected to fall to 91.4 from 91.8 in April, as rising production costs weigh on sentiment.

Also of interest will be the World Economic Forum, which starts this week in Davos after a two-year hiatus due to the pandemic, where Russia's invasion of Ukraine is expected to be discussed.

As for the corporate sector, US retailer earnings data will be released this week, which should weigh on sentiment after last week's disappointing results from major retailers.

Oil prices rose on Monday, supported by expectations of renewed demand ahead of Shanghai's opening in early June after a two-month hiatus and the start of the main US driving season.

In addition, US fuel demand is expected to pick up soon, as the peak of the US driving season traditionally begins on Memorial Day weekend in late May and ends with Labour Day in September.

At 2 a.m., US crude oil futures were up 0.8 per cent at $111.11 a barrel, while the Brent crude contract was up 0.8 per cent at $110.91.

In addition, gold futures were up 0.6 percent at $1,852.43 an ounce and EUR/USD was up 0.4 percent at $1.0600.

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