Stocks – Europe Edges Higher; China News Key

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Investing.com – European stock markets are expected to edge higher Monday, as investors cautiously welcome further signs of growth from China as well as a limited response from U.S. President Donald Trump to Beijing tightening control over the city of Hong Kong.

At 2:10 AM ET (0610 GMT), the DAX futures contract in Germany traded 0.5% higher. {{167|France’s CACAC 40 futures were up 1.4%, while the FTSE 100 futures contract in the U.K. rose 0.3%.

China’s official manufacturing Purchasing Manager’s Index came in at 50.6 on Sunday, indicating that manufacturing activity in the second largest economy in the world continued its expansion in May.

While this has been welcomed, May’s figure still came in below April’s 50.8 level, as well as below the 51 level predicted by many analysts.

Helping the positive tone was the decision from President Trump not to end phase one of its trade deal with China when he laid out his response to China’s national security law for Hong Kong and Macau on Friday, although he did vow to end Hong Kong’s special status.

“Trump’s presser on action against China for implementing the Hong Kong Security Bill, which the White House has alleged strips Hong Kong of any autonomy, proved to be more bark than bite,” Vishnu Varathan, Miuzho Bank’s head of economics and strategy, said in a note. “With specific and verifiable measures against China appearing to be weak, markets may draw hollow consolation that the U.S. is treading carefully.”

This has helped offset worries over riots in a number of U.S. cities, a fresh setback for the world’s largest economy which was only just emerging from a severe downturn. 

Corporate news is thin on the ground Monday, and investors will await Thursday’s meeting of the European Central Bank, which is widely expected to result in a 500 billion-euro ($555 billion) increase to the Pandemic Emergence Purchase Program.

Oil prices sold off Monday, with focus very much on the upcoming meeting of the Organization of the Petroleum Exporting Countries to discuss whether to extend record production cuts beyond end-June.

The price falls come after front-month Brent and WTI prices posted their strongest monthly gains in years in May. 

At 2:10 AM ET, U.S. crude futures traded 0.3% lower at $35.38 a barrel. The international benchmark Brent contract fell 0.3% to $37.70.

Elsewhere, gold futures rose 0.4% to $1,758.90/oz, while EUR/USD traded at 1.1145, up 0.4% on the day.

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