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Title: European Stock Futures Largely Unchanged; German Factory Orders Drop

Sep 06, 2022 01:55AM ET

By: AnalysisWatch

European stock markets are expected to open largely unchanged on Tuesday, stabilizing after sharp losses in the previous session, although investors remain on alert for recession risk.

At 02:00 GMT, the DAX futures contract in Germany was trading mostly unchanged, the CAC 40 futures contract in France was down 0.1%, and the FTSE 100 futures contract in the UK was down 0.2%.

The DAX fell 2.2% and the CAC 40 by 1.2. Russia closed indefinitely one of its main pipelines supplying gas to Germany, sparking fears of a severe energy shortage in Europe during the upcoming winter.

While these markets are expected to stabilize on Tuesday, investors remain on edge ahead of Thursday's European Central Bank meeting. At that meeting, policymakers are expected to approve a second, significant interest rate hike, tightening the fight against inflation, which is fast approaching double digits, before economic conditions deteriorate further.

The move was spearheaded earlier on Tuesday by the Reserve Bank of Australia, which raised its target rate by 50 basis points to 2.35%, the highest level since 2014 and the fifth interest rate hike so far this year.

Just released on Tuesday, economic data showed that German factory orders fell by a significant 1.1% in July, a continuation of the decline seen in the previous month and indicative of slowing economic growth in the Eurozone’s largest economy.

The only stock market that held up relatively well on Monday was in the UK, where investors were preparing to welcome Liz Truss as the country's new prime minister.

Oil prices traded mixed on Tuesday afternoon as traders digested the decision by leading producers to cut production levels to support prices amid fears of slowing demand and economic growth.

Oil prices have fallen since early June on concerns that interest rate hikes and COVID-19 restrictions in parts of China, the world's largest oil importer, could slow global economic growth and cool oil demand.

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