European stock market futures are showing modest gains on Monday, with investors exercising caution as they gear up for the upcoming policy-setting meeting by the European Central Bank (ECB) later this week.
At 02:00 ET (06:00 GMT), the German DAX futures contract traded 0.3% higher, while France’s CAC 40 futures climbed 0.3%, and the U.K.’s FTSE 100 futures contract rose by 0.4%.
ECB Meeting in Sharp Focus
All eyes are on the ECB, set to convene on Thursday, as market participants grapple with uncertainty amid persistently high price pressures and signs of a sharp slowdown in economic activity.
Italy is expected to provide further evidence of the deteriorating economic outlook later today, with industrial production in the eurozone’s third-largest economy projected to have fallen 0.3% on a monthly basis in July, translating to an annual decline of 1.7%.
Last week’s data revealed that the eurozone’s gross domestic product (GDP) grew by a mere 0.1% in the second quarter compared to the preceding three months. Meanwhile, consumer prices in Germany, the eurozone’s largest economy, surged by an annual rate of 6.1% in August—more than three times the central bank’s medium-term target of 2%.
The ECB has raised interest rates in each of its past nine meetings, prompting policymakers to deliberate whether to enact another rate hike, possibly to 4%, or to put a pause on tightening measures.
The policymakers face the challenging task of deciding whether September represents the last viable opportunity for further tightening. UBS Chief European Economist Reinhard Cluse stated, “If you cannot get yourself to hike in September, the case will not be stronger in October, as economic data is likely to deteriorate, and September’s inflation figures are expected to be considerably lower.”
U.S. Inflation Data Also in the Spotlight
European investors are also keeping a close watch on economic developments across the Atlantic, particularly the release of key U.S. inflation data. The latest Consumer Price Index is due on Wednesday, followed by the Producer Price Index on Thursday. These releases follow a series of stronger-than-expected economic indicators last week, reigniting concerns that the U.S. Federal Reserve may increase interest rates more aggressively than previously anticipated.
Alibaba’s Leadership Change Rattles Tech Sector
The technology sector remains in the spotlight following the surprising announcement that Alibaba Group’s outgoing Chief Executive, Daniel Zhang, will also step down from his role as the head of the company’s cloud unit. This unexpected move led to a sharp decline in Alibaba’s stock price in Hong Kong, particularly as Zhang was slated to lead the cloud unit during the company’s upcoming six-way split.
Oil Prices Retreat Ahead of IEA and OPEC Reports
Oil prices are retracing from their recent 10-month highs, which followed the extension of voluntary supply cuts by leading producers Saudi Arabia and Russia until year-end. The International Energy Agency and the Organization of the Petroleum Exporting Countries are set to release their monthly reports this week. Investors are keen to glean insights into expected demand growth, especially considering recent data indicating a cooling Chinese economy despite the lifting of COVID-19 restrictions earlier this year.
As of 02:00 ET, U.S. crude futures were trading 0.5% lower at $87.06 per barrel, while the Brent contract dipped 0.2% to $90.49. Both contracts recorded gains in the previous two weeks, with global Brent settling at its highest level since November on Friday.
In addition, gold futures rose by 0.4% to $1,950.75 per ounce, and the EUR/USD currency pair traded 0.3% higher at 1.0730.
