Inflation Angst Seen Dragging European Benchmarks

(RTTNews) - Markets in Europe are expected to open on a weak note on Wednesday as investors weigh the less-than-expected drop in inflation in the U.S. and the fears of a potentially painful and prolonged recession. Hawkish comments from Fed and ECB officials could also weigh on market sentiment.

Mixed mood had prevailed in Wall Street on Tuesday after inflation in January cooled less than expected. Annual inflation in the U.S. dropped to 6.4 percent in January versus 6.5 percent in December and expectations of 6.2 percent. Core inflation dropped to 5.6 percent in January versus 5.7 percent in December and expectations of 5.5 percent. The Nasdaq Composite added 0.57 percent to close at 11,960.14 whereas the Dow Jones Industrial Average shed 0.46 percent to finish trading at 34,089.27.

Sentiment from the U.S. CPI release spilled over to the European markets as well. Markets in the region closed mildly higher on Tuesday with the pan-European Stoxx-600 gaining 0.08 percent. Switzerland's SMI added 0.20 percent whereas U.K.'s FTSE 100 gained 0.08 percent and France's CAC 40 added 0.07 percent. Germany's DAX however dropped 0.11 percent.

Current indications from the European stock futures imply a negative sentiment at play. The DAX Futures (Mar) is currently trading 0.25 percent lower. The FTSE 100 Futures (Mar) is currently trading 0.17 percent lower. The CAC 40 Futures (March) had closed 0.46 percent higher on Tuesday.

American stock futures are trading in negative territory. The US 30 (DJIA) is down 0.39 percent whereas the US500 (S&P 500) is 0.49 percent lower.

Asian stock markets are trading mostly lower amidst the U.S. CPI angst and fears of a recession. South Korea's KOSPI and Hong Kong's Hang Seng have declined around 1.3 percent each. Australia's S&P ASX 200 has also shed almost 1 percent. Japan's Nikkei 225 dropped a little less than half a percent. China's Shanghai Composite is trading 0.3 percent lower. India's Nifty 50 has declined 0.1 percent. New Zealand's NZX 50 has however gained 0.1 percent.

The Dollar Index (DXY), a measure of the Dollar's strength relative to six currencies, has increased to 103.42, up 0.18 percent on an overnight basis. The EUR/USD pair has decreased 0.17 percent to 1.0717 whereas the GBP/USD pair has shed 0.15 percent to trade at 1.2152.

Gold Futures for April settlement are trading 0.46 percent lower at $1,856.85 per troy ounce amidst negative sentiment following the release of the higher-than-expected CPI data from the U.S. The previous close was at $1,865.40.

Crude oil prices slumped as data from the American Petroleum Institute showed a crude oil stockpile of 10.51 million barrels in the U.S. for the week ended February 10. Markets were expecting an inventory build of 0.32 million barrels versus a draw of 2.2 million barrels in the previous week. Brent Crude Futures for April settlement has decreased 0.89 percent to $84.82 whereas WTI Crude Futures for March settlement has decreased 0.95 percent to $78.31.

U.K. awaits the inflation readings for the month of January. Annual inflation is seen falling to 10.3 percent from 10.5 percent in the previous month. Core inflation is expected to fall to 6.2 percent from 6.3 percent earlier. Industrial Production numbers due on Wednesday from the Euro Area is expected to show a decline of 0.8 percent versus growth of 1 percent in the previous period. Euro Area's trade deficit is seen widening to 12.5 billion euros, from 11.7 billion euros previously. ECB president Christine Lagarde is scheduled to deliver a speech which would be keenly watched. The International Energy Agency's Oil Market Report is also due during the day.

Major earnings updates due from the region on Wednesday include Kering, Glencore, Barclays, Gecina, Klepierre, Hargreaves Lansdown and Dunelm.