Focus turns to US inflation, Fed outlook

LONDON — European markets were slightly lower on Tuesday as focus in global markets turns to key U.S. inflation pressures due on Wednesday.

The pan-European Stoxx 600 was down 0.3% by mid-morning, with travel and leisure shares falling 1.2% to lead losses, while insurance shares rose 0.5%.

Investors are trying to assess the potential pace of the US Federal Reserve’s monetary tightening measures. A surprisingly strong US jobs report last week appeared to reduce the likelihood of a recession, giving the central bank the capacity for more aggressive rate hikes as it looks to tame inflation.

Wednesday̵[ads1]7;s consumer price index for July is expected to provide some clarity on interest rate increases.

Asia-Pacific shares were mixed on Tuesday as markets continued to digest last week’s stellar wages report and assess the course of monetary policy, with Japan’s Nikkei 225 the weakest in the region.

U.S. stock futures rose slightly in early premarket trading on Tuesday as Wall Street reacted to some significant earnings reports, notably weaker-than-expected earnings from Nvidia and several chip makers.

Earnings also remain a key driver of individual share price movements in Europe, with Abrdn, IHG, L&G, Continental and Munich Re among those reporting before the bell on Tuesday.

Swiss travel retailer Dufry gained 3.3% in early trade to lead the Stoxx 600, while workplace company IWG plunged 11% to bottom of the index after their respective first-half earnings.

On the data front, UK retail sales rose 1.6% in July, driven by a heatwave and sales of warm-weather clothing, picnic items and electric fans, according to a report by the British Retail Consortium.

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