The Stocks Drift Lower: Weak Chinese Inflation Data

European most volatile stocks markets started the week on a downward trajectory as weak Chinese inflation data sparked concerns about the health of the world’s second-largest economy.

At 03:30 ET (07:30 GMT), Germany’s DAX index traded 0.4% lower. France’s CAC 40 fell 0.4%, and the U.K.’s FTSE 100 traded 0.1% lower.

Chinese Inflation Data Raises Disinflation Concerns

The release of data earlier on Monday revealed that China’s consumer prices slipped 0.2% in June, resulting in an annual figure that remained flat, marking its slowest growth since 2021.

Furthermore, producer prices fell by 5.4% on a year-on-year basis in June, representing the sharpest decline in seven-and-a-half years.

These figures indicate that Chinese authorities may need to implement further monetary and fiscal policy easing measures. However, they also highlight the challenge Beijing faces in avoiding a deflationary spiral, which would have significant implications for European exporters relying on the Chinese market.

U.S. Inflation Takes Center Stage

While June inflation data will be released in Europe this week, the focus will predominantly be on the U.S. The consumer price index report scheduled for Wednesday is expected to show a year-on-year increase of 3.1% in June, the slowest rise since March 2021.

This data follows Friday’s June jobs report, which virtually confirmed that the Federal Reserve will resume rate hikes later this month.

Kerning’s Acquisition of Creed and Concerns over Casino Guichard Perrachon

Kering (EPA: PRTP) saw its stock decline by 0.5% after reports that the luxury goods company, known for owning Gucci, paid a significant €3.5 billion (€1 = $1.0951) to acquire the high-end French fragranceCreed in June.

Investor worries about rising interest rates have prompted scrutiny of debt-laden companies. Casino Guichard Perrachon (EPA: CASP) experienced a tock exchange drop of over 3% as concerns grew over the €3 billion of debt maturing in the next two years. The troubled French retailer has until the end of July to reach an agreement on a restructuring plan.

Oil Prices Slip on Worries About Chinese Demand

Oil prices declined on Monday following the release of Chinese inflation data, which raised concerns about the slowdown of the world’s second-largest economy and largest crude importer.

At 03:30 ET, U.S. crude futures traded 0.9% lower at $73.20 a barrel, while the Brent contract dropped 0.9% to $77.78.

Both benchmarks had experienced more than a 4% increase last week, reaching their highest levels since May, fueled by announcements from Saudi Arabia and Russia, the world’s biggest oil exporters, about plans to deepen supply cuts in August.

Meanwhile, gold futures fell 0.1% to $1,929.95 per ounce, and EUR/USD traded 0.1% lower at 1.0955.