By Peter Nurse
Investing.com - European stock markets headed lower Monday, with investors starting an event-packed week on a cautious note as they seek out fresh cues.
At 3:50 AM ET (0850 GMT), the DAX in Germany traded 0.2% lower, the CAC 40 in France fell 0.7% and the U.K.’s FTSE 100 dropped 0.7%.
The major indices in Europe ended last week with sharp gains, but there are plenty of reasons for investors to take a watchful stance this week.
European Central Bank President Christine Lagarde said on Sunday that the central bank will update its guidance on monetary stimulus at its next meeting, and indicated that fresh policy might be introduced in 2022 to support the European economy to replace the current "Pandemic Emergency Purchase Program". That's pushing back against warnings from the German-led bloc of ECB members who want the extraordinary level of stimulus to be wound down as soon as possible. The ECB has already more than doubled the size of that program to 1.85 trillion euro ($2.2 trillion) since first announcing it last year.
Last week the ECB changed its stance on inflation, potentially allowing CPI to climb higher than its 2% goal if the circumstance dictates.
Away from Europe, the U.S. is scheduled to release key inflation data for June later this week, while Federal Reserve Chairman Jerome Powell is set to testify in front of Congress on Wednesday and Thursday. China, where regulators launched another salvo at local technology companies over the weekend, is set to release second-quarter GDP data on Thursday.
Meanwhile, the number of Covid-19 cases continues to rise in large parts of Asia, while the U.S. had the most cases since mid-May as the delta variant spreads in less vaccinated parts of the nation.
Turning to the corporate sector, German chemicals giant BASF, a bellwether for European cyclical stocks, fell 0.3% despite raising its full-year forecasts for the second time in quick succession.
French IT consulting group Atos (PA:ATOS) slumped over 13% after cutting its full-year earnings forecast, and Plus500 (LON:PLUSP) stock fell 0.3% after the online trading platform reported a sharp fall in customer income for the first half of the year.
Daily Mail and General Trust (LON:DMGOa) stock rose 5% after its largest shareholder, the Rothermere family, said it was considering taking the British newspaper private in a 810-million-pound ($1.13 billion) deal.
Additionally, ASOS (LON:ASOS) stock rose 0.6% after U.S. giant Nordstrom (NYSE:JWN) announced that it had acquired a minority stake in four brands owned by the British online fashion house, including Topshop and Miss Selfridge, in a bid for younger shoppers.
This week also sees the start of the quarterly earnings season on Wall Street, with the likes of Goldman Sachs (NYSE:GS), JPMorgan Chase (NYSE:JPM) and PepsiCo (NASDAQ:PEP) due to report on Tuesday.
Elsewhere, oil prices edged lower Monday amid uncertainty within the sector given the rising Covid-19 cases globally and the lack of agreement at the last meeting of the Organization of the Petroleum Exporting Countries and their allies over production levels.
However, prices remain at elevated levels with U.S. officials reporting hefty drops in the nation’s crude inventories and soaring gasoline demand.
At 3:50 AM ET, U.S. crude futures traded 0.8% lower at $73.95 a barrel, while the Brent contract fell 0.9% to $74.88.
Additionally, gold futures fell 0.3% to $1,804.55/oz, while EUR/USD traded 0.1% higher at 1.1877.