Title: European Stock Futures Weaken; Inflation Worries Grow

May 19, 2022 02:02AM ET

By: AnalysisWatch

European stock markets are expected to open weaker on Thursday after a sharp sell-off on Wall Street left investors rattled by fears of widespread inflation and a possible global economic slowdown.

At 2:05 AM ET, DAX futures in Germany were trading 0.9% lower, CAC 40 futures in France were down 0.8%, and FTSE 100 futures in the U.K. were down 0.7%.

European stocks likely took their cue from the dramatic sell-off on Wall Street overnight, where the Dow Jones Industrial Average fell more than 1,100 points, or 3.6%, for its biggest one-day loss since 2020.

This came after a number of major U.S. retailers released disappointing quarterly results and warned of rising cost pressures, confirming investors' worst fears of rising inflation.

Federal Reserve Chairman Jerome Powell warned earlier this week that the U.S. economy could be hurt by attempts to lower inflation but that the central bank would continue to push for tighter monetary policy until it is clear that inflation is coming down.

That puts the minutes of the European Central Bank's latest meeting, to be released later in the meeting, in the spotlight as investors look for clues about a possible timetable for monetary tightening.

On Tuesday, Dutch central banker Klaas Knot raised the possibility of a 50 basis point rate hike in July, the first time an ECB policymaker has mentioned it, and Bank of Finland Governor Olli Rehn said Wednesday that the ECB should bring its key rate above zero "relatively quickly."

In the corporate sector, Assicurazioni Generali reported a 9.3% year-on-year drop in first-quarter net profit, which was lower than expected after the company took impairment charges of 136 million euros ($143 million) on its Russian investments.

The results of Swiss bank Julius Baer and budget airline easyJet will also be examined on Thursday.