European markets set for tepid start to the new trading week

  • European stocks are expected to open flat to lower on Monday, with investors continuing to weigh up the European Central Bank's latest policy decision.
  • London's FTSE is seen opening 4 points lower at 7,025, Germany's DAX 15 points lower at 15,595, France's CAC 40 down 15 points at 6,649 and Italy's FTSE MIB 25 points lower at 25,647, according to IG.

LONDON — European stocks are expected to open flat to lower on Monday, with investors continuing to weigh up the European Central Bank's latest policy decision and inflation data.

London's FTSE is seen opening 4 points lower at 7,025, Germany's DAX 15 points lower at 15,595, France's CAC 40 down 15 points at 6,649 and Italy's FTSE MIB 25 points lower at 25,647, according to IG.

European investors continued to digest the European Central Bank's decision last week to slow down bond buying under its pandemic emergency purchase programme (PEPP) in response to higher inflation and stronger GDP growth across the euro zone.

The ECB also modestly revised up its medium-term inflation forecasts, a move that followed data showing euro zone inflation notched a decade high of 3% in August.

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This coming week, global investors will be keeping an eye on the U.S. consumer price index for August, set to be released Tuesday; economists surveyed by FactSet are expecting the reading to show that consumer prices jumped 5.3% on an annual pace in August. Retail sales data will be released later in the week.

U.S. stock index futures were modestly higher during overnight trading on Sunday as the S&P 500 comes off its longest daily losing streak since February. Fears over slowing economic growth and rising inflation have weighed on the market.

All three major averages finished lower on Friday, with the Dow and S&P posting a fifth straight day of losses, while the Nasdaq Composite registered its third consecutive negative session.

In Asia-Pacific markets overnight, shares largely slipped in Monday trade, with stocks in Hong Kong leading losses. Hong Kong-listed shares of Alibaba dropped 4.47% following a Financial Times report that Beijing wants to break up Ant Group's Alipay and force the creation of a separate loans app.

There are no major earnings or data releases in Europe on Monday.

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– CNBC's Pippa Stevens and Eustance Huang contributed to this market report.

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