European stock markets are expected to open marginally higher Wednesday, helped by strong Chinese services sector growth as the corporate earnings season continues.
At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.1% higher, CAC 40 futures in France climbed 0.4% and the FTSE 100 futures contract in the U.K. rose 0.3%.
European equity markets received a positive handover from Asia Wednesday, helped by China’s services sector recording faster growth in July, something of a surprise given the concerns about the country’s economic recovery given the latest outbreak of Covid-19 cases.
The Caixin services purchasing managers’ index, released earlier in the day, was 54.9 in July, higher than the 50.3 figure the previous month and at its highest point since May 2021. This private survey contrasted with the official survey released during the previous week, where the non-manufacturing PMI was 53.3, lower than expected.
The figure is likely to be a short-term peak, given that China is resorting to widespread restrictions on social and business life to contain its biggest Covid-19 outbreak in over a year.
Meanwhile, back in Europe, the second-quarter earnings season, which has been generally positive so far, continues.
Commerzbank (DE:CBKG) recorded a second-quarter loss Wednesday as the German lender underwent a major restructuring, involving hundreds of branch closures and 10,000 job cuts. The bank also announced it would write off 200 million euros in the quarter, abandoning a project to outsource securities settlement to HSBC.
Results from the European banking sector have generally been positive this quarter with retail banking recovering as restrictions to combat the Covid-19 virus were lifted in most of the continent.
Earnings from the likes of Siemens Energy (DE:ENR1n), Hugo Boss (DE:BOSSn) and Intesa Sanpaolo (OTC:ISNPY) will also be in the spotlight Wednesday.
Elsewhere, French aerospace company Thales (PA:TCFP) announced Wednesday that it was in advanced talks to sell its railway signaling business to Japan's Hitachi (OTC:HTHIY) for around $2 billion.
In economic news, the main focus will be on the July services PMI data for the Eurozone, as well as retail sales for June.
Elsewhere, oil prices stabilized Wednesday following consecutive down days on concerns tthat mounting Covid cases in both the U.S. and China, the two biggest consumers of crude in the world, will hit fuel demand.
Providing support was U.S. crude oil supply data from the American Petroleum Institute, released on Tuesday, which showed a draw of 879,000 barrels for the week ending Jul. 30.
Investors now await crude oil supply data from the U.S. Energy Information Administration, due later in the day, for confirmation.
At 2:05 AM ET, U.S. crude futures traded 0.3% lower at $70.33 a barrel, while the Brent contract fell 0.1% to $72.33.
Additionally, gold futures rose 0.1% to $1,815.80/oz, while EUR/USD traded 0.1% higher at 1.1872.