European stock markets exhibited muted trading on Thursday, influenced by a negative outlook from chipmaker Micron (NASDAQ:MU) and anticipation of key U.S. inflation data. By 04:30 ET (07:30 GMT), Germany’s DAX index was up 0.3%, France’s CAC 40 increased by 0.1%, and the U.K.’s FTSE 100 dropped by 0.2%.
Micron’s Outlook and Market Sentiment
The outlook from Micron, often considered a bellwether for the chip industry due to its wide exposure to different chip types and customers, dampened investor sentiment. This tepid performance from a significant player in the semiconductor sector caused apprehension among investors, impacting European equity indices as they struggled for direction.
Awaiting U.S. PCE Inflation Data
Investors are keenly awaiting the release of the U.S. Personal Consumption Expenditures (PCE) inflation data, the Federal Reserve’s preferred inflation gauge, scheduled for Friday. This data is crucial as it could provide more clues about the timing of the Fed’s anticipated rate-cutting cycle. The release of the final U.S. GDP data and eurozone confidence, services, and economic sentiment surveys on Thursday also added to the cautious market environment.
U.S. Federal Reserve’s Stance
The U.S. Federal Reserve kept interest rates unchanged at its June meeting but revised its forecast for rate cuts from three to one 25 basis point reduction by the end of the year, suggesting a potential hold on rate cuts until December. Fed officials have emphasized the need for more data to confirm that inflation is under control before easing monetary policy.
U.S. Presidential Debate
Adding to the day’s significant events, the first U.S. presidential debate between Joe Biden and Donald Trump was set to take place later on Thursday, hosted by CNN. This debate is part of the build-up to the November election and could have implications for market sentiment.
Corporate Sector Movements
In corporate news, H&M’s stock plunged 14% after the retailer reported a smaller-than-expected increase in operating profit for March-May and forecasted a decline in June sales. In contrast, Nokia’s stock rose 0.2% following the announcement of its agreement to sell its submarine networks business to the French state for €350 million, without affecting its financial outlook. Compagnie de Saint Gobain’s stock fell 0.3% after announcing plans to acquire Dubai-based construction chemicals company FOSROC for approximately $1 billion, aiming to boost its international presence.
Crude Oil Prices
Crude oil prices dipped slightly on Thursday due to an unexpected increase in U.S. stockpiles, raising concerns about weak demand from the world’s largest oil consumer. U.S. crude futures (WTI) were down 0.1% at $80.82 per barrel, and the Brent contract also fell by 0.1% to $84.40 per barrel. The U.S. Energy Information Administration reported a 3.6 million barrel increase in crude oil stocks and a 2.7 million barrel build in gasoline inventories, indicating weak fuel consumption despite the summer travel season. This inventory build exacerbated worries about slowing U.S. fuel demand amid persistent inflation and high interest rates.
In summary, European stock markets traded cautiously on Thursday, influenced by Micron’s negative outlook and the anticipation of significant U.S. inflation data. Corporate earnings reports and crude oil inventory data also played crucial roles in shaping market sentiment.