By Peter Nurse
Investing.com - European stock markets are seen opening higher Monday, helped by signs of recovery in China as the corporate earnings season continues. However, gains will be tempered by negative headlines from the pandemic, including a serious threat to Spain's tourist season, and by ongoing U.S.-China tensions.
At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.3% higher, the FTSE 100 futures contract in the U.K. rose 0.4%, while CAC 40 futures in France climbed 0.1%.
Earnings at China's large industrial companies in June rose at the strongest pace since March last year, surging 11.5% from a year earlier in June, nearly doubling the 6.0% increase in May, the National Bureau of Statistics said Monday.
China is a vital export market for many European companies, and signs of a recovery there will boost optimism about the way forward for the region’s corporate sector, which returned to growth in July according to preliminary PMIs released on Friday.
“In a change of fortunes, Europe's economy seems on course for a swifter recovery from the corona crisis than the U.S.,” said analysts at Danske Bank, in a research note.
With this in mind, the German Ifo index, due at 4 AM ET (0800 GMT), will be studied keenly to see whether it complements last week's upbeat PMI message and confirms any acceleration by the German recovery in July.
There remain clouds on the horizon, nonetheless. Second waves of Covid-19 in Spain and Hong Kong prompted fresh containment measures over the weekend, while the U.S. posted another 64,500 new cases on Saturday, according to Johns Hopkins data, despite the usual weekend dip.
In corporate news, SAP (DE:SAPG) will be in focus after the German software company increased its operating profit and revenue in the second quarter, extending its improved performance since ditching its co-CEO model last year.
Low-cost airline Ryanair (LON:RYA) posted a first-quarter net loss and wasn't able to give any guidance for fiscal 2021, due to the impact of the pandemic. It's likely to be one of the companies hit by the U.K.'s decision to impose a quarantine on travelers returning from Spain.
Oil prices were a little lower Monday, with U.S. crude futures trading 0.3% lower at $41.17 a barrel, while the international benchmark Brent contract fell 0.3% to $43.63.
“Market participants appear to be nervous in taking a strong view either way on the market, with plenty of uncertainty still clouding the outlook when it comes to demand,” said analysts at ING, in a research note.
Elsewhere, gold futures rose 1.8% to $1,930.75/oz, not far off the record high of $1,937.60 per ounce hit earlier Monday, surpassing a peak touched in September 2011, while EUR/USD traded at 1.1705, up 0.4%.