European Stocks Futures Edge Higher; Payrolls Put ECB in Focus

By Peter Nurse

Investing.com -- European stock markets are expected to edge higher Monday, as investors digest a disappointing U.S. jobs report and the potential impact on Federal Reserve monetary policy as well as the global growth outlook.

At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.3% higher, CAC 40 futures in France climbed 0.1% and the FTSE 100 futures contract in the U.K. rose 0.2%.

The lackluster start to trading in Europe on Monday, exacerbated by an U.S. public holiday, comes in the wake of the September U.S. payrolls report, which showed a much smaller increase in jobs than expected, but also a pick-up in wages.

The Federal Reserve has been looking for an improvement in employment numbers before starting to rein in its extraordinary monetary stimulus. This miss, with 235,000 jobs created compared with 750,000 expected, looks likely to delay the timing of the tapering of its bond-buying program as the central bank gauges the impact on the economy of the growth of Covid-19 cases.

This also puts the focus on the European Central Bank, as the region’s central bank is expected to debate whether to scale back its stimulus at Thursday’s meeting.

Inflation in the euro area has surged to a 10-year high of 3%, prompting calls from the more hawkish members of the governing council for the bank to begin slowing its huge asset buying program. 

That said, the region’s PMI data have shown confidence in the recovery slipping, and there will be concerns about the single currency rising strongly if the ECB was to begin tapering before the Fed, and the impact that would have on exports.

Crude prices traded sharply lower Monday after Saudi Arabia, the world’s top exporter, cut its prices for Asian buyers over the weekend, suggesting an uncertain demand outlook.

State oil giant Saudi Aramco (SE:2222) said on Sunday that it will cut October prices for all crude grades sold to Asia, the region that consumes the bulk of its oil, by at least $1 a barrel, significantly more than had been expected.

These concerns about demand, with Covid-19 cases still on the rise, came in the wake of the Organization of Petroleum Exporting Countries and their allies, a group known as OPEC+, confirming its intention last week to add another 400,000 barrels per day of supply in October.

By 2:05 AM ET, U.S. crude futures traded 1.4% lower at $68.30 a barrel, while the Brent contract fell 1.5% to $71.56. 

Additionally, gold futures fell 0.3% to $1,829.10/oz, while EUR/USD traded 0.1% lower at 1.1871.

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