European Stock Futures Lower; Asian PMI Data, German Retail Sales Weigh

By Peter Nurse 

Investing.com - European stock markets are expected to open lower Monday, handing back some of the previous session’s gains as data from Asia raised fresh doubts about the global economic recovery.

At 02:00 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.7% lower, CAC 40 futures in France dropped 0.6%, and the FTSE 100 futures contract in the U.K. fell 0.5%.

Stock markets closed firmly higher in Europe on Friday, with the DAX and the CAC 40 both climbing over 1.5%, after Eurozone gross domestic product grew surprisingly strongly in the second quarter, defying expectations of a slowdown, especially after the U.S. had fallen into a technical recession earlier in the week.

However, this optimism has been diluted after a series of purchasing managers' indexes in Asia for July pointed to weakness in the region's largest economies.

South Korea's factory activity fell for the first time in almost two years, Japan saw its slowest growth in activity in 10 months, while in China the official measure of factory activity, released over the weekend, unexpectedly contracted in July amid fresh COVID-19 outbreaks.

There are more manufacturing PMI readings due in Europe later in the session, but German retail sales added to the negative tone, slumping 1.6% on the month in June, and a massive annual fall of 8.8%. 

On the corporate front, quarter earnings continue to flood in, with HSBC (LON:HSBA) in the spotlight Monday after Europe’s biggest bank reported a 15% dip in first-half profit as credit loss provisions rose. 

However, this fall was not as bad as feared and the lender raised its near-term return on tangible equity goal to at least 12% from 2023 onwards, and vowed to restore paying quarterly dividends next year.

Heineken (AS:HEIN), the world's second-largest brewer, posted higher-than-expected first-half earnings on Monday, but the company dropped its margin target for 2023 due to higher costs.

Oil prices fell Monday after the unexpected drop in Chinese factory activity raised concerns over slowing crude demand in the world’s largest importer.

Attention this week will be on the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, which is set to meet on Wednesday to discuss future supply.

By 02:00 AM ET, U.S. crude futures traded 1.2% lower at $97.47 a barrel, while the Brent contract fell 0.8% to $103.18. 

Additionally, gold futures rose 0.3% to $1,776.30/oz, while EUR/USD traded 0.1% higher at 1.0221.