Marketmind: Markets brace for EU, US inflation data blitz

The German share price index DAX graph is pictured at the stock exchange in Frankfurt

A look at the day ahead in European and global markets from Brigid Riley

A slew of economic data is set to roll out on Thursday, including preliminary euro zone CPI numbers and U.S. personal consumption data, with markets hankering for further inflation relief as central bank policy meetings march closer into view.

Reports on Wednesday showed inflation slowed at a disappointingly sluggish pace in Germany and Spain, encouraging bets that the European Central Bank (ECB) may have to raise rates again in September.

The pan-European STOXX 600 index closed lower and the euro jumped in the aftermath of the data, with markets now bracing for the last day of a gloomy August.

Expectations are still hovering around a 50-50 chance of another ECB hike, with the focus on preliminary euro zone CPI data due later in the day. Estimates point to a slight cooling, to a year-over-year level of 5.1%.

Painfully high prices have spurred France to seek some relief for consumers, with the government seeking to double the amount of products subject to price cuts this year. A whole host of data due out on Thursday, including final GDP numbers for the second quarter, will shed more light on the state of the French economy.

Across the Atlantic, softer data from the U.S. economy this week has bolstered market expectations that the Federal Reserve will take a breather from rate hikes, at least at the next policy meeting in September.

The core PCE for July due later in the day is expected to show a mere 0.2% increase from the previous month, while estimates put annual core numbers at 4.2%, up from 4.1%.

Meanwhile, Chinese stocks were looking glum again in the Asian morning after an official factory survey showed manufacturing activity slowed for a fifth month straight.

In company news, UBS appears set to announce a decent profit for the second quarter in what will be the first earnings report since it took over rival Credit Suisse.

A standalone report on Credit Suisse AG results will also be released, spotlighting the level of damage inflicted to the bank’s wealth management arm and its standing with customers following the rescue.

Key developments that could influence markets on Thursday:

-U.S. PCE report (July), weekly jobless claims

-France GDP final (Q2), consumer spending (July), producer prices (July)

-Unemployment rate for euro zone (July), Germany (Aug), Italy (July)

-August flash CPI for euro zone, France, Italy

-July retail sales for Germany and Switzerland

-Central bank events: ECB releases minutes of its July 21 meeting, Feds Bostic and Collins speak at separate events

-Earnings: Campbell Soup Co, Dollar General Corp, Broadcom Inc, Lululemon Athletica, Pernod Richard, UBS

(Reporting by Brigid Riley; Editing by Edmund Klamann)