European Stock Futures Edge Lower; Hopes for Ukraine Diplomacy Exist

European Stock Futures

European stock markets are expected to open marginally lower Wednesday, as investors digest the situation in eastern Ukraine amid hopes the initial Western sanctions leave room for diplomacy to continue.

At 2 AM ET (0700 GMT), the DAX futures contract in Germany traded 0.2% lower, CAC 40 futures in France dropped 0.1% and the FTSE 100 futures contract in the U.K. fell 0.1%.

Global stock markets were roiled Tuesday after Moscow deployed troops in a couple of breakaway regions in eastern Ukraine which Russian President Vladimir Putin had recognized as independent republics the day before.

U.S. President Joe Biden responded by announcing sanctions on two Russian banks and individuals close to Putin, the European Union and Britain also announced plans to target banks and a few wealthy Russians, and Germany halted the approval of Russia’s controversial Nord Stream 2 gas pipeline.

The sanctions are to punish Russia’s economy but are not intended to hit energy markets, a senior U.S. State Department official said Tuesday, Thus, they are not as aggressive as the market had feared.

U.S. Secretary of State Antony Blinken canceled a meeting with Russian Foreign Minister Sergei Lavrov planned for Thursday but added he would do anything he could “to avert an even worst-case scenario, an all-out assault on all of Ukraine, including its capital.”

Away from Ukraine, the March German GfK consumer climate index fell to -8.1, a drop from -6.7 the prior month, while attention will also be on the final Eurozone consumer price index release for January which is expected to confirm the pressure the European Central Bank is under to move to curb the significant inflationary pressures.

In the corporate sector, earnings continue to flow, with Rio Tinto (NYSE: RIO), the world’s top iron ore producer, reporting an almost doubling of annual profit, driven by strong demand from China.

The FTSE MIB climbed down by 0.20% to 26,043.20. In the cash markets, the DAX  Germany was trading down by 0.26%  to 14,693.65. CAC 40  in France fell by 0.01% to 6,787.37 while the FTSE 100  in the U.K. was up by 0.13% to 7,494.35, at the time of writing.

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