European stocks fall after underwhelming Chinese growth data; earnings to ramp up

Investing.com - European stock markets retreated Monday after the release of underwhelming Chinese growth data, while the second-quarter earnings season gets underway in earnest.

At 03:30 ET (07:30 GMT), the DAX index in Germany traded 0.2% lower, the FTSE 100 in the U.K. traded down 0.1% and the CAC 40 in France fell 0.7%.

Chinese growth slowing sharply

Sentiment in Europe has been hit Monday by the release of data showing that economic growth in China, a major export market for Europe’s largest companies, slowed substantially through the second quarter.

China’s second-quarter gross domestic product grew 0.8% from the prior quarter, slightly above expectations for growth of 0.5%, but slowed substantially from the 2.2% seen in the prior quarter.

On an annualized basis, GDP grew 6.3% in the second quarter, thanks largely to a lower basis for comparison from the COVID-impacted period last year, and this was lower than expectations for growth of 7.3%.

The Chinese economy has now expanded a total 5.5% so far in 2023, thanks largely to a strong first quarter, but growth has slowed over the past three months.

Investors have used these numbers to sell into last week's healthy gains, with the broad-based Stoxx 600 index climbing nearly 3%, after data showing rapidly cooling inflation in the U.S. raised expectations the Federal Reserve may be close to ending its aggressive rate-hiking cycle, boosting the U.S. economy.

ECB speakers due

The economic data slate is largely empty Monday, with only final Italian consumer prices due, but investors will look to speeches from ECB Board members Fabio Panetta, Frank Elderson and Philip Lane, as well as President Christine Lagarde, during the session for clues of the central bank’s thinking ahead of the next policy-setting meeting near the end of this month. 

Quarterly earnings start to pour in

This week sees the new quarterly earnings season kick off in earnest, although Monday’s schedule is quite light.

Additionally, the Russian state has taken control of French foods giant Danone's (EPA:DANO) Russian subsidiary along with beer company Carlsberg's (CSE:CARLa) stake in a local brewer, according to a decree signed by President Vladimir Putin on Sunday. Danone stock fell 0.3% and Carlsberg dropped 0.9%.

H&M (ST:HMb) stock slipped 0.2% after the fashion retailer announced it will launch stores and online trade in Brazil in 2025.

Across the pond, Tesla (NASDAQ:TSLA) will be the first of the massive growth and technology names to report on Wednesday, while bank earnings continue, with Bank of America (NYSE:BAC) on Tuesday and Goldman Sachs (NYSE:GS) on Wednesday. 

Oil prices dip after weak Chinese GDP data

Oil prices fell Monday after the disappointing Chinese growth numbers raised concerns about the economic recovery and thus future demand from the world’s largest crude importer.

Additionally, two of the three Libyan oil fields that were shut down on Thursday, including the country’s second-largest, Sharara, resumed production over the weekend, adding supply to the global market. 

By 03:30 ET, the U.S. crude futures traded 1.1% lower at $74.50 a barrel, while the Brent contract dropped 1.1% to $79.02. 

Both benchmarks recorded a third straight week of gains last week, climbing to their highest levels since April.

Additionally, gold futures fell 0.4% to $1,955.95/oz, while EUR/USD traded 0.1% higher at 1.1242.