European stock markets are expected to open higher Monday helped by some bargain hunting after last week’s sharp selloff, but confidence remains brittle with a raft of manufacturing surveys likely to point to a slowing global economic recovery in the face of the new Covid outbreak.
At 2:05 AM ET, the DAX futures contract in Germany traded 0.7% higher, CAC 40 futures in France climbed 0.8%, and the FTSE 100 futures contract in the U.K. rose 0.4%.
European markets struggled last week, with the DAX and the FTSE 100 dropping close to 1% and the CAC 40 over 3%, amid concerns the measures taken to tackle the spread of the delta variant of the Covid-19 virus will hit global growth just as the U.S. Federal Reserve considers starting the withdrawal of its extraordinary monetary stimulus.
This sell-off looks set to persuade some investors to buy into the market Monday, particularly after China reported no new locally acquired Covid-19 cases for the first time since July.
That said, sentiment remains frail ahead of the release of a series of European manufacturing surveys for August later Monday, which will offer an early indication of how growth in the continent is faring in the face of the delta variant.
Earlier Monday, Japan’s factory activity growth slowed in August, while that of the services sector shrank at the fastest pace since May last year, highlighting the impact of the recent wave of Covid-19 infections on the economy given the emergency measures in place.
The U.S. Federal Reserve’s Jackson Hole symposium that opens on Aug. 26 will cast a long shadow over this week, with Federal Reserve Chairman Jerome Powell expected by many to signal a start to reducing bond purchases from their current level of $120 billion a month before the end of the year.
In corporate news, the semiconductor sector could be in the spotlight following Friday’s news that the U.K.’s competition watchdog warned that Nvidia’s $40 billion takeovers of chip designer ARM would require a lengthy investigation.
Elsewhere, oil prices traded higher Monday, rebounding from three-month lows amid some bargain hunting, but sentiment likely remains bearish with growing concerns over slower fuel demand worldwide.
By 2:05 AM ET, U.S. crude futures traded 1.9% higher at $63.30 a barrel, while the Brent contract rose 2% to $66.03. Both contracts had been on a seven-day losing streak and had hit their lowest levels since May 21 earlier in the session.
Additionally, gold futures rose 0.2% to $1,787.00/oz, while EUR/USD traded 0.2% higher at 1.1715.
