European stock futures lower; German annual inflation retreats By

© Reuters – European stock markets are expected to slip lower at the open Tuesday, as investors digest the latest German inflation indications in the wake of disappointing Chinese trade data.

At 02:00 ET (06:00 GMT), the contract in Germany traded 0.4% lower, in France dropped 0.5% and the contract in the U.K. fell 0.5%.

German annual inflation slows in July

Germany started the week’s key inflation releases from around the globe, with data released earlier Tuesday showing that in Europe’s largest economy increased 0.3% on the month in July, matching the June number.

The fell to 6.2% from 6.4% the prior month, an indication that prices are falling in the eurozone’s most important economy, something that could persuade the European Central Bank to pause its prolonged tightening cycle at its next policy meeting in September.

This release is a prelude to the highly anticipated inflation figures from overnight and the on Thursday, which are likely to set the tone for the rest of the week.

China trade data disappoints

Global stocks have been boosted by raised expectations that the U.S. economy will have a soft landing this year, avoiding recession as the Federal Reserve ends its aggressive hikes sooner than had been feared.

Further signs that U.S. inflation is slowing would add to that narrative, as could comments from the likes of Philadelphia Fed President and Richmond Fed President later Tuesday.

On the other hand, the Chinese economy, the world’s second-largest, is struggling, with weak trade numbers out earlier Tuesday the latest illustration of this.

China’s dropped 12.4% in July year-on-year, a more severe drop than the 5% forecast, while contracted 14.5%, steeper than an expected 12.5% decline and the previous month’s 12.4% fall.

Banking sector in spotlight

In Europe, earnings from the likes of Glencore (LON:) and Bayer AG (ETR:) will be studied closely Tuesday, but the banking sector is likely to be in the spotlight after the Italian government announced a new tax on the “extra profits” of its banks this year, while Moody’s credit agency downgraded the ratings of 10 small and midsize U.S. lenders.

Crude retreats after weak Chinese data

Oil prices edged lower Tuesday, weighed by the weak Chinese trade numbers, but losses are small ahead of the latest U.S. stockpile figures.

Oil imports to China, the world’s largest oil importer and second-largest consumer, in July were down 18.8% from imports in June though up 17% from a low base a year ago.

The , an industry body, is scheduled to release its estimate of U.S. crude inventories later in the session, as is expected to show another drawdown after last week’s hefty fall.

By 02:00 ET, the futures traded 0.2% lower at $81.79 a barrel, while the contract dropped 0.2% to $85.14.

Additionally, fell 0.1% to $1,967.90/oz, while traded 0.1% lower at 1.0995.

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