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European Shares Set For Positive Open

stockmarkets jan07 02aug21 lt

European stocks are seen opening higher on Monday despite China reporting a slowdown in manufacturing activity.

Data released Saturday by the National Bureau of Statistics showed China's official purchasing managers' index fell to 50.4 in July from 50.9 in June, adding to concerns about a slowdown in the world's second-largest economy. It was the slowest figure since the index slumped to 35.7 in February 2020.

China's Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) fell to 50.3 last month from 51.3 in June, marking the lowest level in 15 months.

Elsewhere, manufacturing activity rose in export powerhouses Japan and South Korea, though firms suffered from supply chain disruptions and raw material shortages that pushed up costs.

Asian markets rose broadly as Chinese authorities moved to soothe fears over a crackdown on tech companies and a top decision-making body of the ruling Communist Party said China will maintain stable macro policies in the second half of the year to ensure growth.

Oil prices fell about 1 percent in Asian trade as signs of slowing growth in China, the second-largest oil consumer globally, clouded the fuel demand outlook.

Investors also looked ahead to the Organization of the Petroleum Exporting Countries and allies (OPEC+) increasing its oil output.

The U.S. dollar held near a one-month low, heading into a busy week that includes monthly jobs data and reports on manufacturing and service sector activity, factory orders and the U.S. trade deficit.

Closer home, factory purchasing managers' survey results from euro area and the U.K. are due later in the session, headlining a light day for the European economic news.

U.S. stocks fell on Friday, with concerns over China's clampdown on technology businesses, disappointing results from Amazon and renewed worries about a rise of cases of the Delta variant coronavirus weighing on markets.

The Dow dropped 0.4 percent, the tech-heavy Nasdaq Composite shed 0.7 percent and the S&P 500 eased half a percent.

European stocks also ended lower on Friday as concerns about China's policy risks overshadowed data showing a fairly strong rebound in euro area economic growth in the second quarter.

The pan European Stoxx 600 declined half a percent. The German DAX slid 0.6 percent, France's CAC 40 index slipped 0.3 percent and the U.K.'s FTSE 100 gave up 0.7 percent.

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