By Peter Nurse
Investing.com - European stock markets are expected to open lower Wednesday, amid caution ahead of the release of key U.S. inflation data, fresh concerns over the health of the Chinese property market.
At 2:05 AM ET (0705 GMT), the DAX futures contract in Germany traded 0.1% lower, CAC 40 futures in France dropped 0.1% and the FTSE 100 futures contract in the U.K. fell 0.1%.
Investors on both sides of the Atlantic will be keeping a wary eye on the release of the latest U.S. consumer price index later Wednesday, amid concerns that high levels of inflation will prompt the Federal Reserve to raise interest rates earlier than expected.
Data released on Tuesday saw the headline annual rate of U.S. producer price inflation come in at 8.6% and the core rate at 6.8%, nearly twice as high as at any time in the last 10 years.
The theme of high inflation continued Wednesday, as data from China showed that the country's factory gate inflation hit a 26-year high in October, while German consumer prices rose 4.5% on the year in October, a considerable jump from the 4.1% level seen in September.
Another factor prompting caution is the health of China's property industry, with developer Fantasia Holdings warning Wednesday it might not be able to meet its debt obligations. The country’s biggest developer China Evergrande Group faces its biggest solvency test yet Wednesday with over $148 million of coupon payments due on three dollar bonds.
It's also a busy day for European corporate earnings. French bank Credit Agricole (PA:CAGR) reported better-than-expected third-quarter profit, supported by lower pandemic-related provisions for bad loans.
German insurer Allianz's (DE:ALVG) profit also beat expectations, rising 2.3%, while the Dutch bank ABN AMRO (AS:ABNd) announced a stock buyback after reporting an unexpected 14% increase in third-quarter profit.
Crude prices rose again Wednesday, after industry data showed a surprise 2.5 million barrel reduction in U.S. crude stockpiles, reinforcing the view that supply will remain constrained as demand continues to improve.
A build of about 1.9 million barrels had been expected. The U.S. Energy Information Administration's data are due later at 10:30 AM ET.
By 2:05 AM ET, U.S. crude futures traded 0.3% higher at $84.42 a barrel, having gained 2.7% on Tuesday, while the Brent contract rose 0.7% to $85.37, adding to the previous session’s 1.6% gain. Both contracts closed at their highest levels since Oct. 27.
Additionally, gold futures rose 0.2% to $1,827.55/oz, while EUR/USD traded 0.1% higher at 1.1575.