European stocks post small gains; manufacturing PMIs in focus

Investing.com - European stock markets edged higher Monday, continuing last week's positive sentiment while investors digest mixed regional manufacturing data.

At 03:25 ET (07:25 GMT), the DAX index in Germany traded 0.2% higher, the CAC 40 in France rose 0.2%, while the FTSE 100 in the U.K. traded 0.2% higher.

The major European indices are continuing to trade higher, adding to Friday's gains after the Federal Reserve’s preferred inflation gauge fell more than expected in May, raising hopes that the U.S. central bank may be less hawkish than feared in the run-up to the July rate-setting meeting.

German manufacturing PMI set to fall

The majority of the European economies are scheduled to release manufacturing PMI data this session, with Spain the first out of the blocks, showing a slight deterioration in June, compared with the previous month, but not as bad as feared.

The manufacturing sector is set to remain in contraction throughout the region, with most eyes on Germany, the eurozone’s dominant manufacturing base. This is expected to show a PMI release of 41.0 in June, a fall from 43.2 in May.

This should mean that gains are hard won Monday, especially as riots continued in France overnight, with President Emmanuel Macron forced to call off a state visit to Germany over the weekend.

Also of interest will be European Central Bank policymaker Joachim Nagel speaking at a financial conference, with the usually hawkish head of the Bundesbank likely to press the case for more interest rate hikes to combat inflation, which remains elevated in his country.

China’s manufacturing sector still in expansion territory

Helping the tone Monday was the release of a private survey showing that China’s manufacturing sector grew more than expected in June, with the Caixin/S&P Global manufacturing purchasing managers' index coming in at 50.5 in June, above the expected 50.2 and the 50-point mark which separates growth from contraction. 

That said, the reading still slowed from the 50.9 in May, adding to evidence that this crucial sector in the Chinese economy may be losing strength, especially as the official survey showed last week that China’s factory sector shrank for a third straight month in June. 

Oil seeking OPEC cues 

Oil prices are marginally lower Monday after a strong close to last week, ahead of a meeting of oil industry executives with energy ministers from the Organization of Petroleum Exporting Countries and allies later this week.

While the forum is not a policy meeting, meaning that any changes to OPEC production are unlikely, it is still expected to offer cues to the oil market, amid growing fears of worsening demand this year.

By 03:25 ET, U.S. crude futures traded 0.5% lower at $70.28 a barrel, while the Brent contract dropped 0.5% to $75.06.

Additionally, gold futures fell 0.3% to $1,923.55/oz, while EUR/USD traded 0.3% lower at 1.0881.