Investing.com - European stock markets are expected to open marginally lower Monday, handing back some of last week's healthy gains after a drop in U.S. inflation as investors digest mixed Chinese manufacturing data.
At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 0.1% lower, CAC 40 futures in France dropped 0.1% and the FTSE 100 futures contract in the U.K. fell 0.2%.
The major European indices, and those on Wall Street, closed higher Friday 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.
However, the rally is going to struggle to maintain momentum Monday with Tuesday’s U.S. Independence Day holiday set to limit investors prepared to take positions at the start of this week.
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.
German manufacturing PMI set to fall
Back in Europe, good news is likely to be harder to find as there are more manufacturing PMI data releases due, which are expected to show that the sector remains in contraction throughout the region.
Germany, the eurozone’s dominant manufacturing base, is expected to show a PMI release of 41.0 in June, a fall from 43.2 in May.
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.
In France, President Emmanuel Macron remained under pressure after he was forced to call off a state visit to Germany as riots continued into a fifth night after a police officer killed a teenager in a suburb northwest of Paris.
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 02:00 ET, U.S. crude futures traded 0.2% lower at $70.52 a barrel, while the Brent contract dropped 0.2% to $75.28.
Additionally, gold futures fell 0.2% to $1,926.35/oz, while EUR/USD traded just higher at 1.0912.