European stock futures edge higher; sentiment faces inflation test

Investing.com – European stock markets are expected to edge higher at the open Monday, as investors prepare for this week’s key inflation data that is likely to drive sentiment going forward.

At 02:00 ET (06:00 GMT), the contract in Germany traded 0.3% higher, in France climbed 0.4%, and the contract in the U.K. rose 0.3%.

U.S., China inflation data in focus

European stocks struggled last week as a downgrade in the U.S. sovereign rating, rising Treasury yields, and weak Chinese economic data dented the appetite for risk-driven markets.

Investors look set to attempt a minor comeback at the start of a new week, but inflation figures from the , on Thursday, and , on Tuesday, will be major tests this week. 

The Federal Reserve has made it clear that it is looking to see how the U.S. inflation is responding to its year-long tightening cycle before making a decision about interest rates in September.

On the flip side, data from China this week is expected to show its economy slipping closer toward disinflation amid a slowing post-COVID economic recovery.

German industrial production slumps in June

Back in Europe, fell 1.5% on the month in June, hit by a slowdown in global demand, particularly from China.

The German economy stagnated in the second quarter of 2023, missing forecasts for modest growth, as weak purchasing power, higher interest rates, and low factory order books all weighed on the euro zone’s largest economy.

U.S. entertainment sector faces tough conditions

In Europe, the earnings season is slowing down, although numbers are due from the likes of Siemens Energy (ETR:) and Coca-Cola Içecek (IS:).

Across the pond, the focus will be on the entertainment sector with Walt Disney (NYSE:), News Corp (NASDAQ:), and Fox (NASDAQ:) all expected to report tough conditions. Disney, in particular, has had a string of disappointing film releases, and its theme parks also seem to be struggling.

Crude steadies near four-month high

Oil prices edged lower Monday, but remained near their highest levels since mid-April after top producers Saudi Arabia and Russia announced plans late last week to extend output cuts for another month to tighten global markets further.

By 02:00 ET, the futures traded 0.1% lower at $82.74 a barrel, while the contract dropped 0.1% to $86.15. 

Both contracts recorded their sixth consecutive weekly gains last week, the longest winning streak since December 2021 to January 2022.

Additionally, fell 0.3% to $1,970.45/oz, while traded 0.3% lower at 1.0981.