Investing.com – European stock markets pushed higher Monday, despite lackluster German economic data, with focus turning to Thursday’s meeting of the European Central Bank.
At 3:35 AM ET (0735 GMT), the DAX in Germany traded 0.8% higher, the CAC 40 in France rose 0.7% and the U.K.’s FTSE index was up 0.8%. Volumes are likely to be affected by Monday’s U.S. Labor Day holiday.
Earlier Monday, German industrial output disappointed, climbing just 1.2% in July, below the 4.7% increase expected.
The release “leaves us with a picture of a German manufacturing sector that is still far off making a full recovery. As of July, production remained 11% below its pre-virus level,” said Claus Vistesen of Pantheon Macroeconomics in a research note. “The good news is that headline leading indicators suggest that the upturn will be sustained,” he added.
A release from the Ifo institute had suggested on Monday that German industrial firms expect production to increase slightly in the coming months.
“The industrial sector – the engine of Germany’s economy – is gradually getting back on track,” Klaus Wohlrabe, who runs surveys at Ifo, said in a statement. The Ifo indicator – not to be confused with its better-known business climate index – rose to 15.4 points in August from 14.3 points in July.
Away from Germany, the most important release due later Monday will be Spanish consumer confidence, which is due at 6:30 AM ET (1030 GMT).
This brings Thursday’s policy meeting at the European Central Bank firmly into focus. While the central bank is expected to keep policy steady, there will be a fresh set of economic projections to digest. Additionally, after the recent Federal Reserve announcement, there may also be interest in the ECB’s own strategy review.
“The Fed’s decision to move to an average inflation target has set the scene,” said ING’s Carsten Brzeski, in a research note published late last week. “We don’t expect any insights in the ECB’s strategy next week. It is hard to believe that Christine Lagarde will want to preempt the discussion which has just started. In the end, however, we still see the ECB moving to a more symmetric target changing the definition of price stability to ‘around 2%’.”
In corporate news, AB Foods (LON:ABF) stock rose 1.9% after the U.K.-based retailer said that trading in the fourth quarter of fiscal 2020 beat its expectations for both its flagship Primark brand and its food businesses.
Oil prices dropped Monday, hitting their lowest levels since July, after Saudi Arabia, the world’s top oil exporter, cut its October official selling price for the Arab Light crude it sells to Asia by the biggest margin since May.
The market remains oversupplied despite the efforts of the top producers to rein in production as demand still remains curtailed by the impact of the coronavirus pandemic.