European Markets Set for Steady Open Ahead of Key US Inflation Data

European markets set for a flat start

Morning data points suggest a modest opening for the major European exchanges on Monday. The French CAC 40 is forecast to dip about 0.06%, the German DAX is expected to be virtually unchanged, and the UK FTSE 100 may slip roughly 0.33%. The Euro Stoxx 50 and the broader Stoxx 600 are both projected to lose around 0.02‑0.05%.

Key economic calendar

The only major European indicator slated for today is the Sentix sentiment index for the euro‑zone. Investors, however, are keenly focused on Wednesday and Thursday when the United States will release two pivotal inflation measures – the Consumer Price Index (CPI) and the Producer Price Index (PPI). These numbers are critical because Federal Reserve Chair Kevin Warsh has shown little enthusiasm for forward‑looking guidance.

U.S. bond yields and employment data

U.S. Treasury yields fell on Friday after a jobs report revealed an unexpected loss of jobs in July, prompting a sharp downward revision of the previously announced rate hikes for the next two months.

Geopolitical backdrop

In the Middle East, Iran’s foreign minister Abbas Araqchi said on Sunday that Tehran and Washington are not in talks and will not resume negotiations until the U.S. fully respects the provisional agreement signed in June. He added that an Iran‑Oman agreement on the Strait of Hormuz is in its final stages, helping keep oil prices relatively stable.

Earnings season momentum

European equities have recorded a fourth consecutive week of gains, buoyed by strong corporate earnings. Companies within the Stoxx 600 are now expected to deliver a profit growth of more than 22% for Q2 – the fastest expansion since Q3 2022.

Wall Street recap

New York’s market closed higher, with the S&P 500 reaching a fresh closing record on Friday after a robust week. The Dow Jones Industrial Average rose 0.28% (151.83 points) to 54,036.93, the S&P 500 added 0.62% (47.68 points) to 7,757.64, and the Nasdaq Composite jumped 1.30% (342.26 points) to 26,690.62.

Asian market highlights

In Tokyo, the Nikkei surged 2% to 66,927.61, driven by AI‑related stocks. The broader Topix gained 0.44% to 4,092.93. Chipmakers Advantest (+5.5%) and Tokyo Electron (+3.6%) led the gains. The MSCI Asia‑Pacific ex‑Japan index rose 0.70%, with South Korea’s Kospi up 0.65%.

China’s Shanghai Composite inched up 0.01% after hitting a three‑week high, while the CSI 300 fell 0.69% in a volatile session.

China’s producer‑price inflation slowed more than expected in July, hitting a three‑month low, and consumer‑price inflation also eased, according to official data released on Sunday. Market participants are now watching additional Chinese economic indicators closely. Nomura does not anticipate any monetary easing in China this year, suggesting that fiscal policy will play a larger role in stabilising growth.

Currency and commodity outlook

The U.S. dollar edged up 0.18% against a basket of major currencies, recovering slightly from a two‑month low reached on Friday. The euro slipped 0.06% to $1.1550, while the pound remained steady at $1.3486.

U.S. 10‑year Treasury yields were flat at 4.6515% after Friday’s surprise job losses tempered expectations of a September rate hike by the Fed.

Oil prices rose modestly as uncertainty lingered over the reopening of the Strait of Hormuz. Brent crude increased 0.45% to $83.91 per barrel, and U.S. West Texas Intermediate (WTI) rose 0.35% to $78.45.