European Stock Futures Edge Higher; Fed Meeting, Banking Sector in |Focus

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By Peter Nurse – European stock markets are seen opening marginally higher Tuesday, with investors exercising a degree of caution ahead of the start of the Federal Reserve’s two-day meeting and with the earnings season continuing apace. 

At 3:05 AM ET (0705 GMT), the contract in Germany traded 0.1% higher, in France climbed 0.1% and the contract in the U.K. rose 0.1%. 

A largely bullish session on Wall Street Monday, with the and closing at record highs, failed to inspire Asian markets, with Japan’s around 0.4% lower, as new Covid-19 infections remained a worry in the region even as the Bank of Japan held policy steady and took a more positive view on growth.

European markets look set to follow the U.S. lead, although gains look light with many investors stuck to the sidelines ahead of the latest .

The U.S. central bank is widely expected to keep rates on hold and asset purchases unchanged, but investors will pay close attention to comments from Chairman Jerome Powell, particularly regarding inflation.

Ahead of that, the European banking sector is likely to be in focus Tuesday after HSBC (LON:) reported a 79% rise in first-quarter profit, as an improved economic outlook allowed Europe’s largest bank by assets to release cash set aside against bad loans because of the coronavirus pandemic.

UBS (SIX:) also posted a 14% rise in first quarter net profit, as the world’s largest wealth manager’s results were hurt by a $774 million hit from the default of U.S. investment firm Archegos.

Additionally, Schneider Electric (PA:) raised its full-year guidance after the French energy group reported a 12% rise in first-quarter revenue, Swiss drugmaker Novartis (SIX:) reported a drop and engineering group ABB (SIX:) offered up a cautious second-quarter outlook even as its profits rose. 

Oil and gas giant BP (NYSE:) managed to beat expectations thanks to windfall profits in gas trading, helped by bursts of extreme cold weather across the northern hemisphere this winter.

Oil prices edged higher Tuesday, but gains have been capped by growing concerns over the impact on demand for fuel given the surge in Covid-19 cases in India, the third-largest crude importer in the world.

futures traded 0.8% higher at $62.41 a barrel, while the contract rose 0.9% to $65.61.

The main monitoring committee of OPEC and its allies meets virtually later Tuesday to discuss policy on production after its technical experts projected a strong recovery in global oil demand this year. However, they also noted that the outlook was clouded by resurgent coronavirus cases, primarily in India.

Elsewhere, rose 0.1% to $1,781.85/oz, while traded 0.1% lower at 1.2078.

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