European markets are expected to open lower Monday morning, following broad declines in Asia after China’s central bank cut reserve requirements for banks.
Britain’s FTSE 100 was set to open 13 points lower at 7,307; Germany’s DAX was seen tracking 28 points lower at 12,073; and the French CAC was off by 20 points, at 5,337.
Over in Asia, shares dipped broadly after the People’s Bank of China said it would cut the amount of cash that banks are required to hold as reserves. The move comes amid concerns about the economic impact of trade tensions and import tariffs between China and the U.S.
Chinese stocks in particular fell sharply after mainland markets opened for the first time in a week after the country celebrated Golden Week. Traders also digested purchasing managers’ index (PMI) data out of China Monday, which showed a fast-growing services sector but rising cost pressures and lower employment.
Investors will be keeping an eye on U.S. markets on Monday amid fears of rising interest rates. Comments by U.S. Federal Reserve Chair Jerome Powell last week about the U.S. central bank’s interest rate hiking path sent Treasury yields to multi-year highs. And key nonfarm payrolls data showed a worse-than-expected increase in jobs — but a fall in the unemployment rate to 3.7 percent, the lowest level in almost five decades. The economic data, alongside Powell’s comments, sent shares stateside lower Friday, with the S&P 500 posting its worst weekly performance since September 7.
On the political front, U.K. Prime Minister Theresa May got a boost Sunday after Japanese Prime Minister Shinzo Abe told the Financial Times that he would welcome Britain into the Trans-Pacific Partnership agreement “with open arms” after Brexit. And EU officials have become growingly optimistic about the possibility of a Brexit deal being reached, with European Commission President Jean-Claude Juncker saying an agreement could be struck by November.
However, surveys released by Deloitte and the British Chambers of Commerce on Monday showed that uncertainty is still weighing on British businesses, putting exports, recruitment and investments under pressure.
In corporate news, British lender Lloyds is in talks with asset manager Schroders to create a wealth management alliance; British newspaper firm Reach will post a trading update Monday; and French luxury goods firm LVMH is set to report sales numbers once markets close.
As for data, German industrial production numbers for August are due to be released Monday morning.
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