European Stocks Mixed; ECB, Bank Earnings, New U.K. Leader Eyed

By Peter Nurse 

Investing.com - European stock markets traded in a mixed fashion Monday, with investors weighing up further central bank tightening ahead of the likely announcement of a new U.K. political leader as well as quarterly results from Europe’s top investment banks.

By 03:55 ET (07:55 GMT), the DAX in Germany traded 0.6% higher, the CAC 40 in France edged 0.7% higher, while U.K.'s FTSE 100 dropped 0.2%.

European equity markets have been given a boost Monday by the strong gains on Wall Street at the end of last week on a report that the Federal Reserve could debate a smaller interest rate hike in December.

That said, the European Central Bank is widely expected to aggressively tighten monetary policy, with a second 75 basis point rate hike looking like a done deal on Thursday with euro area inflation at almost 10%, well above the central bank’s 2% target.

Economic data released earlier Monday showed that the important German manufacturing sector has retreated further into contraction territory, with the country’s manufacturing PMI falling to 45.7 in October, from 47.8 the previous month.

Economic activity for the Eurozone as a whole also fell in October, with the S&P Global Composite PMI falling to 47.1, from 48.1 in September. This tallied with Friday’s numbers showing that consumer confidence in the Eurozone stayed close to a record low in October, highlighting the continued risk of a recession this winter as households struggle with an acute cost-of-living crisis.

China's GDP rose 3.9% in the July-September quarter year-on-year, official data showed on Monday, quickening from the 0.4% pace in the second quarter.

Also of interest this week will be earnings from a number of Europe’s top investment banks, often seen as an important gauge of business health in the region. 

UBS (SIX:UBSG) on Tuesday, followed by Deutsche Bank (ETR:DBKGn) and Barclays (LON:BARC) on Wednesday, while the most hotly awaited announcement is a major overhaul by Credit Suisse (SIX:CSGN) on Thursday.

Philips (AS:PHG) stock fell 0.7% after the Dutch medical equipment maker said it expected to scrap around 4,000 jobs, while Dutch technology investor Prosus (AS:PRX) stock fell 11% on worries over Asian growth.

Elsewhere, Britain’s Conservative Party is set to select a new leader who will become prime minister, the country's fifth in six years, later Monday. Former chancellor Rishi Sunak is the front-runner after former PM Boris Johnson pulled out of the running late Sunday.

Oil prices fell Monday after data showed demand in China, the world’s largest importer of crude, remained subdued in September as its Zero-COVID policy continued to limit activity.

China imported 40.24 million tons of crude oil last month, equivalent to about 9.79 million barrels per day, data released Monday, a week behind schedule, showed. This was up slightly from 9.5 million barrels in August, but still below the near 10 million barrels a day imported a year earlier.

By 04:00 ET, U.S. crude futures traded 1.3% lower at $83.97 a barrel, while the Brent contract fell 1.2% to $90.25. 

Additionally, gold futures fell 0.1% to $1,654.25/oz, while EUR/USD traded 0.3% lower at 0.9827.