European Stock Futures Higher; Diplomacy Hopes, Central Bank Meetings in Focus By


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By Peter Nurse – European stock markets are expected to open higher Monday on raised hopes for a diplomatic solution to the Ukraine war at the start of a week dominated by key central bank meetings, including that of the Federal Reserve.

At 2 AM ET (0700 GMT), the contract in Germany traded 2% higher, in France climbed 1% and the contract in the U.K. rose 0.7%.

The next round of the talks on the war in Ukraine between the two principals is scheduled for early Monday, but the noises emerging from the last session were reasonably upbeat.

U.S. Deputy Secretary of State Wendy R. Sherman said on Sunday that Russia was showing signs it might be willing to have substantive negotiations, while Ukrainian negotiator Mykhailo Podolyak said Russia was “beginning to talk constructively.” 

That said, despite the optimistic tone, the fighting rages on with Russia launching a destructive bombardment of a large Ukrainian base near the border with NATO member Poland on Sunday.

Away from the events in Eastern Europe, the focus this week will be on policy-setting meetings from a number of key central banks.

The is widely expected to announce its first interest rate hike since 2018 on Wednesday as policymakers try to balance the twin threats of inflation, which is running at a four-decade high, and economic uncertainty arising from the war in Ukraine. 

The is also expected to hike rates again this week, while central banks in , , and will also hold meetings.

Back in Europe, Eurozone finance ministers are set to meet later Monday to discuss potential support for the region’s economy given the risks to growth in the wake of Russia’s invasion of Ukraine just as it starts to recover from the pandemic.

In corporate news, Telecom Italia (MI:) will be in the spotlight after Italy’s biggest phone group said on Sunday it would start formal talks with KKR & Co (NYSE:). to assess the private equity giant’s potential offer, almost four months after the approach.

Deutsche Bank (DE:) could also be in focus after the German lender stated Friday that it would wind down its business in Russia, changing its stance after criticism over its ongoing ties.

Oil prices weakened Monday, extending last week’s decline on hopes for progress in the diplomatic efforts to end the Ukraine war as well as traders bracing for higher U.S. interest rates, and thus a likely stronger dollar. 

By 2 AM ET, futures traded 2.7% lower at $106.33 a barrel, while the contract fell 2.4% to $109.97. 

Both contracts have surged since Russia’s Feb. 24 invasion of Ukraine, with both hitting their highest levels since 2008 last week. However, U.S. crude still recorded a weekly drop of 5.7% last week, while Brent last week was down 4.8%. 

Additionally, fell 0.2% to $1,981.45/oz, while traded 0.1% higher at 1.0912.

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