Title: European Stock Futures Higher; Recession Concerns Remain

Jun 21, 2022 01:57AM ET

By: AnalysisWatch

European stock markets are expected to open higher on Tuesday, recovering from last week's brutal sell-off, but concerns remain that aggressive interest rate hikes by central banks to fight inflation could trigger a global recession.

At 2am, DAX futures in Germany were trading 0.7% higher, CAC 40 futures in France climbed 0.5% and FTSE 100 futures in the UK rose 0.4%.

The US Federal Reserve raised interest rates by 75 basis points, the most since 1994, the Swiss National Bank unexpectedly raised rates by 50 basis points and the Bank of England made its fifth consecutive rate hike of 25 basis points.

In addition, European Central Bank President Christine Lagarde on Monday reiterated the central bank's intention to raise interest rates in July and September, suggesting that policymakers remain committed to fighting inflation even after the volatility in eurozone bond markets.

Elsewhere, investors will be closely monitoring the political situation in France after the weekend elections resulted in an invalid parliament.

President Emmanuel Macron is expected to invite all political parties capable of forming a parliamentary group in the new parliament to talks later on Tuesday.

The European Union is expected to finalise details of a 9 billion euro ($9.5 billion) financial package for Ukraine in the coming days after the European Commission recommended last week that the war-torn country be granted candidate status to join the union.

Oil prices rose on Tuesday, recouping some of last week's heavy losses, as traders once again focused on tight crude supplies coupled with the prospect of higher near-term demand in the US and China.

At 2am ET, US crude futures were trading 1.9% higher at $110.02 a barrel, while the Brent contract was up 0.9% at $115.12.

Both benchmarks posted their first weekly decline since April last week on fears that aggressive monetary tightening could lead to a global recession and destroy demand.

The WTI contract fell over 9% last week and did not trade on Monday as it was a US holiday, while Brent fell over 7% last week and only gained back 0.9% in the previous session.

In addition, gold futures fell 0.2% to $1,836.10/oz, while EUR/USD traded 0.1% higher at 1.0519.