Europe stocks lower on weak China data, corporate earnings

The DAX futures contract in Germany traded down 0.3 per cent, CAC 40 futures in France declined 0.5 per cent and the FTSE 100 futures contract in the U.K. dropped 0.3 per cent

European stock markets are expected to open lower Tuesday, as investors digested weak Chinese trade data and more quarterly corporate earnings.

At 07:05 GMT, the DAX futures contract in Germany traded down 0.3 per cent, CAC 40 futures in France declined 0.5 per cent and the FTSE 100 futures contract in the U.K. dropped 0.3 per cent.

European equities are set to follow their Asian counterparts lower after data released earlier Tuesday underlined continued headwinds for the Chinese economy, the second biggest in the world.

Chinese exports slipped 6.4 per cent YoY in October, accelerating from a 6.2 per cent decline in the previous month, while the country’s trade surplus dropped to its worst level since May 2022, at the peak of the covid pandemic.

The decline in exports signalled worsening overseas demand, especially from China’s biggest trade destinations - Europe and the U.S.

Adding to the negative sentiment, the Reserve Bank of Australia raised interest rates earlier Tuesday, citing a slower-than-expected drop in inflation.

Evidence of this weak economic condition in Europe came with the release of German industrial production figures for September, which dropped 1.4 per cent on the month.

This followed on from a revised 0.1 per cent drop the previous month and illustrates the difficulties the eurozone’s dominant economy is suffering.

Eurozone September producer prices are set for release later in the session, and are expected to increase 0.5 per cent on the month, a 12.5 per cent decline on an annual basis.

Oil prices dropped Tuesday after the disappointing trade data from China raised concerns over sluggish demand in the world's biggest oil importer.

Chinese exports dropped more than expected in October amid worsening overseas demand, while an unexpected increase in imports saw China’s trade surplus drop to its worst level in 17 months.

This prolonged weakness in exports could stymie growth in the country going forward and thus affect oil demand.

By 07:05 GMT, the U.S. crude futures traded 1.1 per cent down at $79.94 a barrel, while the Brent contract declined 1.1 per cent to $84.25 a barrel.

Both contracts were nursing steep losses over the past week, amid growing expectation that the Gulf war will not disrupt supply in this oil-rich region.

Furthermore, gold futures dropped 0.6 per cent to $1,975.80/oz, while EUR/USD traded 0.2 per cent down at 1.0696.