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European Stock Futures Edge Up; German Poll, Evergrande, Energy Crunc in Focus By


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By Peter Nurse – European stock markets are expected to open marginally higher Tuesday, as investors continue to digest the inconclusive result of the weekend’s German election as well as Chinese property group Evergrande’s ongoing debt crisis.

At 2:05 AM ET (0605 GMT), the contract in Germany traded 0.2% higher, in France climbed 0.4% and the contract in the U.K. rose 0.2%.

Investors will be keeping an eye on the ramifications of Germany’s on Sunday, which resulted in the Social Democrats party narrowly winning the vote.

Prolonged negotiations are likely to follow in order to form a coalition to govern Europe’s biggest economy, but the far left’s weak result has in all likelihood ruled it out as a potential partner, to the market’s relief.

Investors also continue to fret about the future of China Evergrande Group (HK:), and the potential for global contagion, after it failed on Friday to meet a deadline to make an interest payment to offshore bond holders. The world’s most indebted property developer now has 30 days to make the payment before it falls into default. In order to maintain stable conditions, Tuesday’s injection by the Chinese central banking of 100 billion yuan in the money market was a necessary step.

Influential investment bank Goldman Sachs (NYSE:) cut its forecast for China’s 2021 economic growth to 7.8% from 8.2% and for 2022 to 5.5% in a note earlier Tuesday, citing issues at energy-intensive industries as well as concerns over managing stresses in the real estate market.

Back in Europe, the European Central Bank will hold its annual research meeting, with ECB President Christine Lagarde’s speech sure to be watched for any sign that surging energy prices are changing the bank’s thinking about inflation. Early trade saw record prices for European power and gas rise to record levels on Tuesday.

Ahead of that, the widely-watched data showed a surprise rise in confidence in October, to +0.3 from a revised -1.1 the previous month.

Crude oil prices rose Tuesday for the sixth straight session, despite concerns about a global shortage and rising demand following the removal of Covid-19 restrictions.

The global supply situation remains tight, despite Hurricane Ida affecting the U.S. Gulf of Mexico production region late in August. However, the Organisation of Petroleum Exporting Countries members and their allies are gradually increasing the output.

Investors now await oil supply data from the , due later in the day, as well as OPEC’s latest World Oil Outlook.

U.S. crude oil futures were 1.2% higher at $76.38 per barrel by 2:05 PM ET. This is its highest level since July after rising 2% over the prior day. The contract rose 1.1% to $79.62, reaching its highest since October 2018, after climbing 1.8% on Monday.

Additionally, fell 0.2% to $1,747.90/oz, while edged higher to 1.1698.


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