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European stock futures lower on Chinese property woes, Fed hiking concerns

Published 2023-08-14, 02:30 a/m
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Investing.com - European stock markets are expected to open lower Monday, with sentiment hit by persistent concerns about Chinese economic growth as well as higher U.S. inflation.

At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 0.4% lower, CAC 40 futures in France dropped 0.3% and the FTSE 100 futures contract in the U.K. fell 0.3%.

Concerns surrounding China’s property sector weigh

The main European indices are set to follow the weak lead from Asia amid fresh worries about China's debt-laden property sector.

Country Garden (HK:2007), one of the country’s biggest developers, warned of a hefty $7.6 billion loss in the first half of 2023, prompting sharp selling to a new record low on Monday. 

The company is also facing difficulty in meeting its debt obligations, having suspended trading in 11 of its onshore bonds, prompting fears of a default and more headwinds for the country’s economic recovery from its COVID hit.

China has the second-largest economy in the world, and is a major regional growth driver as well as a massive market for Europe’s largest companies.

U.S. inflation prompts unease 

European investors are also likely to fret about the possibility of U.S. interest rates rising further after Friday’s stronger-than-expected producer price index

The reading, which came after data also showed an increase in consumer inflation, pushed up concerns that the Federal Reserve will keep hiking when it next meets in September.

Back in Europe, German wholesale prices fell 0.2% to the month in July, a drop of 2.8% on the year, as the largest economy in the eurozone continues to struggle. 

U.S. retail sector dominates quarterly earnings

There are few tier-one companies scheduled to report earnings in Europe Monday, and most of the corporate attention is likely to be focused on the U.S. retail scene.

A number of the largest U.S. retailers are set to report their results this week, which will give investors an important insight into the health of consumer spending, a major driver of the U.S. economy.

Crude falls on rising dollar, China concerns

Oil prices retreated Monday, as concerns about China’s faltering economic recovery as well as a stronger dollar prompted profit-taking after seven weeks of gains on tightening supply from OPEC+ output cuts.

Friday’s U.S. producer price index release saw the dollar climb to a five-week high, which hurts demand for crude as it makes the commodity more expensive for international buyers. 

By 02:00 ET, the U.S. crude futures traded 1.3% lower at $82.13 a barrel, while the Brent contract dropped 1.2% to $85.75. 

Additionally, gold futures fell 0.1% to $1,943.85/oz, while EUR/USD traded 0.2% lower at 1.0928.

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