European equity futures lower; crypto turmoil and US political uncertainty weigh


By Peter Nurse – European stock markets are set to open lower on Thursday as turmoil in the crypto market dampens sentiment as investors continue to digest the U.S. midterm elections as well as quarterly corporate results.

At 02:00 ET (07:00 GMT), the DAX futures contract in Germany traded down 0.5%, the CAC 40 futures contract in France fell 0.4% and the FTSE 100 futures contract in UK fell 0.3%.

The political climate in the United States remained uncertain on Thursday, two days after the midterm elections, as Republicans edged closer to securing a majority in the House of Representatives, while control of the Senate hung in the balance.

US President Joe Biden said on Wednesday he was ‘ready to work’ with Republicans if they won control of one or both houses of Congress, but doing so would allow Republicans to make it very difficult for Biden to pass. of any legislation with which they have difficulty.

The wave of cryptocurrency selling caused by the financial difficulties of the crypto exchange FTX adds to the risk averse mood. Biggest rival Binance announced on Thursday that it had backed out of a bailout after due diligence.

Back in Europe, quarterly corporate earnings continue to pour in.

Deutsche Telekom (ETR:DTEGn) raised its full-year guidance after strong third-quarter earnings, boosted by its T-Mobile US (NASDAQ:TMUS) business which added customers, while Merck KGaA (ETR:MRCG) reported better-than-expected quarterly results on higher revenue from pharmaceuticals and biotech lab equipment.

Crédit Agricole SA (EPA:CAGR) reported higher-than-expected third-quarter earnings, driven primarily by higher business lending and consumer finance revenue, while Zurich Insurance Group (SIX:ZURN) reported that it would likely take $550 million net before taxes hit by Hurricane Ian.

The European data slate is largely empty on Thursday, with the main focus of the day expected to be on US Inflation Data later in the session. Economists expect the headline annual rate to fall to 8.0%, the lowest since February.

Oil prices fell slightly on Thursday, continuing to decline on concerns over demand growth from China, the world’s largest importer, the renewal of COVID restrictions as cases rise, coupled with increased inventories of crude oil in the United States.

Guangzhou city, a key manufacturing hub, reported more than 2,000 new cases for November 9, the third day above that level, while local cases across China hit their highest level since April 30.

U.S. crude oil inventories rose 3.9 million barrels last week, data from the Energy Information Administration Wednesday, taking stocks to their highest level since July 2021.

However, most of this increase could be attributed to a drawdown of about 3.5 million barrels from the strategic petroleum reserve.

As of 2 a.m. ET, U.S. crude futures were trading down 0.2% at $85.69 a barrel, while the Brent contract was down 0.1% at $92.58.

Brent prices have fallen more than 6% so far this week, while WTI is down more than 7%.

Additionally, gold futures fell 0.1% to $1,711.90 an ounce, while EUR/USD traded up 0.2% to 1.0029.

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