EU markets volatile, oil dipped – US inflation data leaves investors weary

EU markets volatile ahead of US inflation data   

European markets were volatile this Tuesday morning as investors were cautious ahead of key US inflation data out tomorrow and rising geopolitical tensions.  

The DAX was 0.46% lower in early trade on Tuesday, the FTSE 100 was down by just 0.04% but saw gains at 0.02% a few minutes earlier and the CAC 40 was down by 0.10%.  

Recently, EU markets were pushed by positive corporate earnings and hope that inflation will decline and the Federal Reserve will get less aggressive with interest rate hikes.  

Geopolitical tensions continue to, however, also affect EU markets in a negative light. The United Nations Secretary-General, António Guterres, warned that the shelling of Europe’s largest nuclear power plant in Ukraine could have serious consequences.  

Moreover, Taiwan’s foreign minister said earlier on Tuesday that China was using the military drills it launched in protest against the US House Speaker Nancy Pelosi’s visit as an excuse to prepare for an invasion of the island.   

Consumers are expecting inflation to slow 

A New York Federal Reserve survey showed on Monday that consumers are expecting inflation to slow down and run at 6.2% over the next year and a 3.2% rate for the next three years.  

This marks a big drop from the respective 6.8% and 3.6% results from June survey and a big win for the Federal Reserve.  

Expectations for food increases fell at the fastest pace in the survey’s history. Consumers are also expecting gasoline prices to fall.  

US inflation rates will be out tomorrow and a big focal point for markets.  

Oil lower as Iran nuclear accord talks continue 

Oil prices were also in the negative on Tuesday morning as investors digested the resumption of talks to revive the 2015 Iran nuclear accord late on Monday.  

Brent Crude futures were 1.22% lower and valued at $95.47a barrel while West Texas Intermediate (WTI) futures declined by 1.41% and were valued at $89.46 a barrel. 

EU diplomats presented the US and Iran with a draft accord to revive the 015 deal, with a senior EU official stating that a final decision was expected within “very, very few weeks”.  

Reviving the Iran nuclear deal would mean that the country’s crude exports would return to the global market and boost its oil exports by around 1 million barrels per day, however, agreement has proved difficult in the past so investors are cautious.  

Gold futures slightly higher 

Gold futures were slightly higher on Tuesday morning, rising by 0.07% and costing $1,806.45/oz.  

Silver futures also followed the positive trend, up by 0.11%, platinum futures were 0.35% higher, meanwhile, palladium futures fell by 1.93%.  

Australia’s big four bank stocks dip 

Australia’s big four banking stocks – Commonwealth Bank of Australia (CBA), Australia and New Zealand Banking Group (ANZ), Westpac Banking Group (WBC) and National Australia Bank dipped as the National Australia Bank (NAB) warned of higher operating costs in the coming months. 

CBA stocks were down by 1.29%, ANZ stocks fell by 0.92%, WBC dipped by 0.77% and NAB declined by 2.93%.  

Despite the dip in shares, NAB reported a stronger than expected quarterly cash profit, up 6% at 1.8 billion AUD vs the bank’s forecast of 3-4%.  

Currently, traditional lenders like NAB are expected to profit from higher lending rates, however, the rate hike came at a rime when Australian housing market is under extreme pressure from a higher cost of living.  

A survey by Westpac showed that consumer sentiment in Australia is at its lowest level in two years, as rising interest rates and inflation continue to harshen living conditions.  

UK insurer Legal & General to beat earnings 

The British insurer Legal & General set it is on the track to meet and beat its cash and capital generation goals as it reported an 8% rise in operating profit.  

The company saw a large jump and third party inflows to 65.6 billion pounds (around $79.25 billion), more than double the flows seen in the first half of 2021.  

“We are beneficiaries of rates rising across the world,” the company’s CEO, Nigel Wilson, told Reuters.  

LGEN shares are up 0.13% following the news.  

Alibaba to proceed to primary stock listing 

The Hong Kong Stock Exchange approved Alibaba’s application to convert locally traded shares to primary listing from the current secondary status.  

This would make Alibaba eligible for inclusion in a stock connect program with mainland China and is expected to take effect by the end of 2022.  

“We expect that the Primary Conversion will allow us to broaden our investor base and facilitate incremental liquidity, and in particular expand access to China- and other Asia-based investors,” the company said on Monday.  

Alibaba shares briefly rose by more than 2% in Hong Kong trading on Tuesday morning following the news.   

Earnings today: Coinbase! 

In earnings news, crypto fans should look out for Coinbase reporting its financial results later this evening. The company has been struggling amid a crypto crash and harsh crypto-winter.   

Top cryptocurrencies bearish as BTC back to $23,000 levels  

Bitcoin (BTC) fell back to $23,000 levels after briefly reaching $24,000 yesterday morning.  

Ethereum (ETH) was 0.29% lower in the past 24 hours. BNB fell by 0.75%, Cardano (ADA) was down by 0.45% and Solana (SOL) declined by 0.38%.  

The popular Elon Musk-endorsed memetoken Dogecoin (DOGE) was 1.42% lower.