European stocks mixed, awaiting key eurozone growth, inflation data

European stock markets displayed a mixed and divergent performance on Monday, as investors anxiously awaited the imminent release of pivotal eurozone growth and inflation data. The DAX index in Germany showed little movement, trading mostly flat, whereas the CAC 40 in France managed to eke out a modest 0.1% gain. In contrast, the FTSE 100 in the United Kingdom experienced a decline of 0.2%.

The trading day commenced on a somber note after disappointing retail sales figures from Germany emerged, casting a stark spotlight on the ongoing economic struggles faced by the eurozone's largest economy. German retail sales registered a 0.8% drop on the month in June, far weaker than the 0.2% rise that had been anticipated, and a notable 1.6% decrease compared to the previous year.

The recent decision by the European Central Bank (ECB) to raise interest rates to a 23-year high added to market uncertainty, with ECB President Christine Lagarde suggesting that future policy moves would be heavily influenced by incoming economic data. She intimated that the next meeting in September might bring either another policy rate hike or a potential pause, emphasizing that the decision would hinge on the prevailing economic conditions at that time.

Given this context, investors were closely monitoring the release of crucial data on eurozone growth and inflation later in the trading session. Forecasts projected a 0.2% increase in the flash eurozone GDP for the second quarter on a quarterly basis, with a 0.5% gain on an annual basis. As for the eurozone's consumer inflation, it was expected to come in at 5.3% for July, slightly lower than the previous month's figure of 5.5%.

The gloomy mood on Monday was further exacerbated by the release of data showing that China's vital manufacturing sector experienced a fourth consecutive month of contraction in July. This raised concerns about the sustainability of the economic recovery in the world's second-largest economy. Although the official manufacturing purchasing managers' index in China edged up slightly from 49.0 in June to 49.3 in July, it still remained below the crucial 50-point threshold, which indicates a contraction.

Chinese economic performance carries particular significance for European exporters, as China is a crucial market for their goods and services. Growth in China had slowed to 0.8% in the second quarter of the year, down from a more robust 2.2% growth rate in the previous quarter.

Corporate sector developments also contributed to market fluctuations. Heineken, the world's second-largest brewer, experienced a 5% slump in its stock after revising its forecast for 2023 profit growth downward. The company cited weak performance in its Asian markets during the second quarter as a key reason for the adjustment.

Despite reporting an impressive 44% increase in first-half profit, Pearson, an education publisher, saw its stock fall by 0.7%. Market confidence in the company's outlook was impacted by a statement from a U.S. rival, which claimed that artificial intelligence was having a negative effect on its business.

BT Group, a telecommunications giant, witnessed a 0.6% decline in its stock price after announcing Allison Kirkby as the new chief executive, replacing Philip Jansen. Kirkby had previously served as the CEO of Swedish telecoms provider Telia.

In the energy markets, oil prices experienced a drop due to concerns over the state of China's manufacturing sector, which in turn raised worries about the economic outlook for the world's biggest crude importer.

Nevertheless, the crude market was still on track to achieve its most substantial monthly gain in over a year, driven by expectations of tightening global supply. Additionally, Saudi Arabia's potential extension of its production cuts into September further boosted market sentiment.

By 03:55 ET, U.S. crude futures traded at $80.41 a barrel, marking a 0.2% decline, while the Brent contract dropped 0.3% to $84.19. Both crude oil contracts had recently settled at their highest levels since April, demonstrating gains for a fifth consecutive week, and were poised to conclude the month with their most substantial monthly gains since January 2022.

In the precious metals market, gold futures experienced a 0.4% fall, settling at $1,992.80 per ounce. Meanwhile, the EUR/USD currency pair showed some strength, trading 0.1% higher at 1.1021.