Key European Index Movements:
UK FTSE 100 (+0.35%)
French CAC 40 (+0.41%)
German DAX (-0.09%)
Currency Exchange Rates:
EUR/USD (+0.04%)
Stock Highlights:
Kingfisher (LON: KGF) issues profit warning, down nearly 6%
Ocado (LON: OCDO) sees stock rise by 3% after strong retail sales
Naked Wines (LON: WINEW) shares plummet 8.6% following substantial losses
Oil Prices Surge on Weak U.S. Shale Production:
U.S. shale production forecast hints at a third consecutive monthly decline, boosting oil prices
U.S. crude futures climb 0.7% to $91.23 per barrel
Brent contract rises 0.5% to $94.90, reaching 10-month highs
European stock markets traded with a mixed tone on Tuesday as investors exercised caution ahead of the crucial two-day U.S. Federal Reserve policy meeting and the release of additional inflation data from the eurozone.
As of 03:50 ET (07:50 GMT), the DAX index in Germany edged down by 0.1%, while France’s CAC 40 recorded a 0.1% gain, and the UK’s FTSE 100 showed a modest 0.1% uptick.
Investor caution prevailed as trading remained within narrow ranges. Market participants anxiously awaited updates from the Federal Reserve in Washington, where policymakers commenced discussions regarding the U.S. economic outlook.
The U.S. central bank is widely anticipated to maintain interest rates at their current level, ranging from 5.25% to 5.50%, upon the conclusion of the meeting on Wednesday. This decision comes after 11 consecutive rate hikes aimed at curbing inflation. However, the markets remain divided on whether this will be the final adjustment or if one more rate hike will occur this year, given that inflation continues to exceed the 2% target.
In Europe, the final inflation figures for August within the eurozone are set to be released later in the session. These figures are expected to confirm a 0.6% month-on-month increase in the Consumer Price Index (CPI), resulting in a 5.3% year-on-year rise. While this remains significantly above the European Central Bank’s 2% medium-term inflation target, core inflation, which excludes volatile energy and food prices, is anticipated to dip to 5.3% from the previous 5.5% on an annual basis.
Following the central bank’s recent interest rate hike to a record 4%, policymakers have hinted at a potential pause in the rate-hiking cycle as they assess the economic impact of the numerous interest rate increases on the region.
In the corporate sector, Kingfisher (LON: KGF) experienced a nearly 6% drop in its stock value after issuing a profit warning attributed to disappointing results from its French and Polish businesses. Conversely, Ocado (LON: OCDO) witnessed a 3% surge in its stock price after reporting significant sales growth in its retail arm and the opening of a new distribution center in Luton, aimed at cost reduction. Meanwhile, Naked Wines (LON: WINEW) shares slumped by 8.6% following substantial losses, with concerns raised about its future viability.
Oil prices continued their upward trajectory, marking the fourth consecutive session of gains. This surge is attributed to concerns surrounding supply, triggered by a bleak U.S. shale production forecast. According to the U.S. Energy Information Administration’s monthly drilling productivity report, U.S. oil output from leading shale-producing regions is expected to decrease for a third consecutive month in October, reaching its lowest level since May 2023. These developments, coupled with extended production cuts by Saudi Arabia and Russia, have heightened fears of a substantial supply deficit for the year.
As of 03:50 ET, U.S. crude futures traded at $91.23 per barrel, reflecting a 0.7% increase, while the Brent contract climbed 0.5% to reach $94.90. Both benchmarks have sustained gains for three consecutive weeks, now approaching 10-month highs.
Additionally, gold futures saw a 0.1% rise to $1,955.55 per ounce, while EUR/USD experienced a 0.1% decrease, trading at 1.0682.
