Inflation indicators are expected to rise in Europe. EU leaders agreed on a partial oil embargo on Russia

The US stock market did not trade yesterday due to the holiday. Nevertheless, index futures on Asian and European sessions demonstrated growth, so if there will be no sharp movements at the European session today, the US stock indices will open with a gap.

European stock markets were mostly rising yesterday. German DAX (DE30) gained 0.79%, French CAC 40 (FR40) added 0.72%, Spanish IBEX 35 (ES35) decreased by 0.03%, British FTSE 100 (UK100) increased by 0.19%. Monday's data showed that inflation in Germany reached another all-time high (7.4% → 7.9% y/y), while Spanish CPI data was also higher than estimated (8.3% → 8.7% y/y). France and Italy will also release their data today, and then the Eurozone CPI data will be updated. Analysts expect inflation in Europe to rise from 7.5% to 7.8% y/y. The ECB will hold a monetary policy meeting next week. Therefore, if Eurozone inflation is higher than expected today, the ECB may decide to act more aggressively. ECB President Christine Lagarde said last week that the Central Bank’s deposit rate should start to rise in July, and a significant rise in the Eurozone consumer price index could strengthen the case for an aggressive rate hike. Also, today there will be other important data on Europe to pay attention to. In particular, GDP data for the last quarter.

Oil prices have been rising for the last two days, recording new two-month highs after the European Union agreed to significantly cut oil imports from Russia, tightening an already tight crude oil market. The sanctions prohibit the purchase of crude oil and oil products from Russia delivered to other states by sea (⅔ of exported oil), but make a temporary exception for pipeline oil. Due to the background of growing demand in the US and reduced blockages in China, with limited supply, oil prices began to rise as expected. The EU agreed in principle to cut 90% of oil imports from Russia by the end of 2022, managing to negotiate with Hungary, which opposed the embargo.

Asian markets traded higher yesterday. Japan's Nikkei 225 (JP225) gained 2.19%, Hong Kong's Hang Seng (HK50) jumped by 2.06% on Monday, and Australia's S&P/ASX 200 (AU200) was up by 1.45%. China's manufacturing activity fell at a slower pace in May as COVID-19 restrictions in major manufacturing centers eased, with the official manufacturing purchasing managers' index rising to 49.6 in May, up from 47.4 in April. However, this is still below the 50 level, indicating weakness. The slowdown in Chinese manufacturing affects production lines in other major Asian countries, with both Japan and South Korea reporting sharp declines in production. Japan's industrial production level unexpectedly declined by 1.3% last month. Meanwhile, Japan's consumer confidence index rose for the second straight month in May, and Japan's unemployment rate decreased from 2.6% to 2.5%.

Main market quotes:

S&P 500 (F) (US500) 4,158.24 0 (0%)

Dow Jones (US30) 33,212.96 0 (0%)

DAX (DE40) 14,575.98 +113.79 (+0.79%)

FTSE 100 (UK100) 7,600.06 +14.60 (+0.19%)

USD Index 101.36 -0.31 (-0.31%)

• – Japan Unemployment Rate (m/m) at 02:30 (GMT+3);
• – Japan Industrial Production (m/m) at 02:50 (GMT+3);
• – Japan Retail Sales (m/m) at 02:50 (GMT+3);
• – China Manufacturing PMI (m/m) at 04:30 (GMT+3);
• – China Non-Manufacturing PMI (m/m) at 04:30 (GMT+3);
• – Eurozone French Consumer Price Index (m/m) at 09:45 (GMT+3);
• – Eurozone French GDP (q/q) at 09:45 (GMT+3);
• – Switzerland GDP (q/q) at 10:00 (GMT+3);
• – Eurozone German Unemployment Rate (m/m) at 10:55 (GMT+3);
• – Eurozone Italian Consumer Price Index (m/m) at 12:00 (GMT+3);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
• – Eurozone EU Leaders Summit at 13:00 (GMT+3);
• – Canada GDP (q/q) at 15:30 (GMT+3);
• – US Chicago PMI (m/m) at 16:45 (GMT+3);
• – US CB Consumer Confidence (m/m) at 17:00 (GMT+3).

by JustMarkets, 2022.05.31

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.