By Peter Nurse
Investing.com - European stock markets are expected to open marginally higher Monday after recent weakness, with the focus on the German Ifo business climate index for a gauge of the strength of the Eurozone’s dominant economy.
At 02:00 ET (07:00 GMT), the DAX futures contract in Germany traded 0.1% higher, CAC 40 futures in France climbed 0.1%, and the FTSE 100 futures contract in the U.K. rose 0.1%.
European equities suffered heavy losses last week, with the German DAX almost 3% lower, after the European Central Bank eased the pace of its interest rate hikes but stressed significant tightening remained ahead as it fights elevated inflation.
ECB governing council member Klaas Knot said on Friday that the central bank has a longer way to go in raising interest rates than the Federal Reserve, but ultimately won't raise its rates to the same level as its U.S. counterpart.
This promise of more interest rate hikes ahead as well as likely weak economic growth has weighed on sentiment, but investors will be hoping for some improvement from the German Ifo business climate index for December later in the session.
The report comes after PMI data last week showed that the downturn in German economic activity moderated for a second straight month, indicating that a likely recession in the bloc will be shallower than previously thought.
Also of interest will be comments by ECB Vice-President Luis de Guindos in Madrid later Monday, as investors look for more clues as to the thinking of the central bank policymakers.
In corporate news, Germany is also poised to take on the risks associated with €216 billion (€1 = $1.0629) of derivatives built up by energy giant Uniper (ETR:UN01), as it moves to nationalize the company hit hard by the region’s energy crisis.
Crude oil prices rose Monday, boosted by the decision of the Biden administration to begin refilling its strategic reserves as well as hope for demand growth from China in the new year.
The U.S. government said on Friday that it will initially buy 3 million barrels of oil for its reserve, having run the Strategic Petroleum Reserve down to its lowest level in nearly 40 years in a bid to curb rising fuel prices this year.
Additionally, China has abandoned its strict ‘COVID-zero’ policy, and while the world's top crude oil importer and second largest oil consumer is experiencing a leap in cases as it reopens, hopes are increasing that economic activity will expand in 2023.
By 02:00 ET, U.S. crude futures traded 0.4% higher at $74.75 a barrel, while the Brent contract rose 0.3% to $79.30. Both contracts were still trading near one-year lows, having logged steep declines in recent sessions on fears of a potential recession in 2023.
Additionally, gold futures rose 0.1% to $1,800.85/oz, while EUR/USD traded 0.5% higher at 1.0631.