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Title: European Stock Futures Lower; U.S. Inflation Release Looms Large

Jul 12, 2022 02:02AM ET

By: AnalysisWatch

European stock markets are expected to open lower on Tuesday, continuing the negative start to the week, with investors worried about the worsening energy crisis ahead of the release of a highly anticipated U.S. inflation report.

European indexes closed mostly lower on Monday, with the DAX finishing 1.4% lower, as investors awaited the release of this week's key U.S. inflation data.

Global stock markets have suffered this year as several central banks, and the U.S. Federal Reserve in particular, have begun aggressively raising interest rates to try to curb runaway inflation.

The U.S. consumer price index will be released on Wednesday and is expected to show an increase of 8.8% year-over-year and 1.1% month-over-month in June.

This release would likely give the Fed the green light to raise interest rates by 75 basis points later this month, matching June's hike, which was the largest increase by the U.S. central bank since 1994.

Fears of a worsening global energy crisis have also hit confidence, as the largest Russian gas pipeline to Germany began 10 days of annual maintenance. Fears are growing that the shutdown will be prolonged, especially as the European Union prepares to impose a staggered embargo on Russian oil and ban marine insurance on any tanker transporting it.

The main economic data to be released on Tuesday is Germany's July ZEW economic sentiment index, which is expected to weaken substantially as growth slows in Europe's top economy.

In corporate news, Norway's largest bank, DnB (OL:DNB), reported quarterly earnings above expectations, supported by rising interest rates and high levels of activity in the Norwegian economy.

Tight closures earlier in the year, mainly in the Shanghai trading hub, had a significant impact on the country's economic activity and thus on demand for crude oil.

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