European stock markets are expected to open marginally higher Tuesday, continuing to benefit from Federal Reserve Chairman Jerome Powell’s relatively dovish message on Friday. However, gains will be limited after disappointing growth data out of China.
At 2:05 AM ET (0605 GMT), the DAX Futures contract in Germany traded 0.1% higher, CAC 40 Futures in France climbed 0.2% and the FTSE 100 Futures contract in the U.K. rose 0.3%.
Data released earlier Tuesday brought China’s economic recovery into question, with factory activity expanding at a slower pace in August and the services sector tumbling into contraction territory.
The mobility restrictions that were imposed to stop the recent new outbreak of Covid-19, coupled with high raw material prices and supply constraints, pushed the country’s manufacturing purchasing managers’ index down to 50.1 in August, from 50.4 in July. It’s now six months since China’s PMI peaked.
The non-manufacturing PMI tumbled to 47.5, from 53.3, below the 50-mark indicating growth and the lowest reading since February 2020.
There are a number of important economic releases due Tuesday in Europe, including German Unemployment Data data and Eurozone inflation numbers, both for August. Concerns are also growing about this region’s economic rebound after Monday saw Eurozone economic sentiment falling more than expected in August.
Still, European stocks closed higher Monday, with the exception of the holidaying U.K. market, and this positivity is expected to continue after Fed Chair Powell declined to provide a firm timetable for tapering asset purchases in his keynote speech on Friday at the virtual Jackson Hole symposium.
Many had expected the Fed chief to pinpoint the beginning of the end for the central bank’s unprecedented monetary support in the wake of the coronavirus outbreak.
Elsewhere, the U.S. has officially ended its military presence in Afghanistan, meeting President Joe Biden’s deadline to end American involvement in the troubled central Asian country after 20 years of war.
The FTSE MIB climbed down by 0.07% to 26,003.30. In the cash markets, the DAX Germany was trading up 0.42% to 15,954.65. CAC 40 in France rose by 0.01 % to 6,687.22 while the FTSE 100 in the U.K. were down by 0.01% to 7,150.35. ,at the time of writing.