European stock indices climbed on Monday even as oil retreated on an OPEC+ output hike, with the DAX, FTSE 100, Stoxx 600 and CAC 40 all higher approaching midday. Investors are now waiting on central bank meeting minutes for direction, and U.S. futures pointed higher as bets on a Fed rate rise eased.
European shares traded mostly higher on Monday, with the Stoxx 600, the DAX, the FTSE 100 and the CAC 40 all rising approaching midday, even as semiconductor stocks lost momentum and other sectors picked up the slack. The gains came against a backdrop of falling oil and easing expectations for further rate rises.
Oil slips as OPEC+ opens the taps
Crude fell after OPEC+ agreed to raise output again and shipping through the Strait of Hormuz kept recovering. Seven members of the group said they will raise production by about 188,000 barrels a day in August, a fifth straight monthly increase as the cartel unwinds earlier production cuts, with Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman among the participants.
The extra barrels weighed on prices in early European trade. Brent crude was down 0.4% and WTI futures edged 0.3% lower. According to SPI Asset Management: "OPEC is opening the spigot because its members need more revenue as much as the market needs more supply."
Data steadies as investors await central bank minutes
German manufacturing orders rose 1.9% on the month in May, following a 3.2% decline in April and beating the 0.7% increase economists polled by The Wall Street Journal had expected. Data agency Destatis said the reading showed tentative signs of stabilizing despite continued uncertainty from the Middle East conflict.
Attention now turns to policy. The European Central Bank raised interest rates by 25 basis points in June, lifting the key deposit rate to 2.25%, and releases the minutes of that meeting on Thursday. Market pricing on LSEG shows about a 70% chance of a September rate rise, and Commerzbank said the downward correction in ECB rate expectations seems to be running out of steam for now.
U.S. futures firm as Fed bets ease
Across the Atlantic, stock futures were set to rise as pricing for a Federal Reserve rate hike eased and optimism toward tech stocks returned. Treasury yields fell in early trade after last Thursday's weaker-than-expected employment data, which led markets to scale back their expectations of Fed rate rises. Investors are also awaiting the minutes to the Fed's latest meeting.
Source: MarketScreener
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