European stock futures mixed; subdued trading ahead of PMIs, retail sales

By Peter Nurse 

Investing.com - European stock markets are expected to open in a tepid fashion Monday, as investors digest more Chinese cities relaxing mobility restrictions as well as the release of more important regional economic data.

At 02:00 ET (07:00 GMT), the DAX futures contract in Germany traded 0.1% lower, CAC 40 futures in France dropped 0.1%, while the FTSE 100 futures contract in the U.K. rose 0.1%.

European equities are set to start the week in a subdued fashion, with investors set to focus on the release of the final November PMI data for the region, which are set to show the Eurozone heading into a recession as the year comes to an end.

Eurozone retail sales for October are also due for release, and are expected to fall 1.7% on the month with discretionary spending severely hit by soaring inflation.

Despite these signs of European economies in strife, the European Central Bank is still expected to hike interest rates at its final policy meeting of the year on Dec. 15 with inflation running well above its 2% target.

President Christine Lagarde is to make two appearances this week before the start of the ECB’s blackout period, and investors will be looking to see if she hints at a 50-basis point rate increase, after data last week showed that Eurozone inflation eased more than expected in November.

This caution means the European markets are unlikely to follow the positive trend seen in Asia after a number of Chinese cities joined the important economic hubs Shanghai and Beijing in relaxing some mobility and testing measures.

This raised hopes for a nationwide reversal of the country’s strict ‘zero-COVID’ stance, which has contributed to the slowing of China’s economic recovery.

“The timing of a major COVID policy change may be a bit earlier than our baseline expectation of after March 2023,” analysts at UBS said in a note on Monday.

In the corporate sector, Credit Suisse (SIX:CSGN) is likely to be in the spotlight Monday after the Wall Street Journal reported that Saudi Crown Prince Mohammed bin Salman is considering an investment of around $500 million to back the embattled Swiss lender’s investment bank.

Crude oil prices firmed Monday on optimism of a broad relaxation of China’s COVID restrictions while OPEC+ maintained its output targets over the weekend.

The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, decided to stick to the October plan to cut output by 2 million barrels per day from November, waiting to see the impact of the EU import ban and Group of Seven $60-a-barrel price cap on seaborne Russian oil, which came into force Monday.

By 02:00 ET, U.S. crude futures traded 0.7% higher at $80.50 a barrel, while the Brent contract rose 0.6% to $86.06. 

Additionally, gold futures rose 0.3% to $1,815.05/oz, while EUR/USD traded 0.3% higher at 1.0564.