European stock markets edged broadly lower Tuesday, handing back some of the previous session’s strong gains ahead of the week’s European Central Bank meeting, while the telecoms sector outperformed.
At 3:55 AM ET (0755 GMT), the DAX in Germany traded 0.2% lower, the U.K.’s FTSE 100 dropped 0.2%, while the CAC 40 in France rose 0.1%.
The major indices in Europe posted gains of approaching 1% on Monday, helped by orders for German factory goods unexpectedly surging in July, hitting a post-reunification high.
The positive economic news continued Tuesday as German industrial production climbed 1.0% on the month in July, while stronger than expected August export data out of China pointed to resilience in global demand despite the headwinds caused by delta variant-driven Covid-19 outbreaks and high raw material prices.
However, investors are cautious Tuesday ahead of not only Germany’s closely-watched ZEW survey of economic sentiment for September, but more importantly Thursday’s policy-setting meeting of the European Central Bank.
Concerns are growing that the increasingly vocal hawkish members in the central bank’s governing council may start to get their way in terms of reducing the bond-buying program, especially after annual consumer inflation soared to 3.0%, way above the bank’s target.
In corporate news, Deutsche Telekom (OTC:DTEGY) stock rose 1.8% after announcing a share-
swap deal with Softbank (OTC:SFTBY) to increase its stake in U.S. unit T-Mobile, while also selling its Dutch unit. Dutch telecoms rival KPN (AS:KPN) stock climbed 3.4%.
Steelmakers were broadly higher after data showing China imported record amounts of iron ore by value in August, suggesting domestic Chinese demand, the main driver of world steel prices, is still strong.
Elsewhere, Ted Baker (LON:TED) stock climbed 0.9% after the clothes retailer said second-quarter sales surged 50%, the end of Covid-19 restrictions in the U.K. boostng demand for its occasional wear.
On the flip side, Allianz (DE:ALVG) stock slipped 0.5% after Reuters reported that regulators have launched an investigation into the German financial services company after the demise of some of its U.S. investment funds last year.
Crude prices were mixed Tuesday, helped by the strong growth in China's exports, but gains are limited following Monday’s move by Saudi Arabia, the world’s top exporter, to sharply cut prices for October cargoes destined for Asia.
Markets are also contending with the decision of the Organisation of Petroleum Exporting Countries and their allies, a group known as OPEC+, to continue adding crude to the global market, as well as the ongoing impact on U.S. supply from Hurricane Ida.
By 3:55 AM ET, U.S. crude futures traded 0.3% lower at $69.08 a barrel, while the Brent contract rose 0.4% to $72.51.
Additionally, gold futures rose 0.8% to $1,819.45/oz, while EUR/USD traded 0.1% higher at 1.1875.