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Title: European Stock Futures Largely Flat; Fed Meeting Looms Large

Jul 25, 2022 01:49AM ET

By: AnalysisWatch

European stock markets are expected to open unchanged on Monday, with investors cautious as the Federal Reserve takes center stage this week amid expectations of another big policy hike at this week's meeting.

At 02:00 GMT, the DAX futures contract in Germany was up 0.1%, the CAC 40 futures contract in France was up 0.1%, and the FTSE 100 futures contract in the United Kingdom was unchanged.

Last week, the European Central Bank became the center of attention, raising interest rates by an impressive 50 basis points on Thursday the first increase in 11 years and this week it is the Federal Reserve's turn.

There is widespread expectation that the US central bank will raise interest rates by at least 75 basis points as inflation remains high.

The FOMC statement and Fed Chairman Jerome Powell's accompanying press conference will also be closely scrutinized as the market tries to gauge the possibility that this aggressive tightening will plunge the world's largest economy and a major driver of global growth into recession.

Growth in Europe is already starting to slow, with data released on Friday showing that the euro zone's composite purchasing managers' index has returned to contraction territory for the first time since March 2021.

On Monday, key data will be released at 4:00 p.m. EDT: Germany's Ifo business climate index for July, which is expected to fall to 90.2 points from 92.3 points in June as sentiment in the euro zone's largest economy deteriorates.

Oil prices slipped on Monday, continuing a recent sell-off as traders fear that this week's Fed meeting will lead to further monetary tightening, which will affect global economic growth and therefore demand for crude.

As of 02:00 GMT, US crude futures were trading 0.9% lower at $93.83 a barrel, while the Brent contract was down 0.9% at $97.52. Both contracts fell for a fourth straight session.

In addition, gold futures fell 0.3% to $1,722.95/oz, while EUR/USD dropped 0.1% to $1.0199.

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