Big week for earnings, monetary policy

LONDON — European markets are set to pull back on Monday as investors brace for a big week of corporate earnings and a key monetary policy decision from the U.S. Federal Reserve.

Britain’s FTSE 100 is seen around 29 points lower at 7,247, Germany’s DAX is expected to shed around 83 points to 13,171 and France’s CAC 40 is set to drop by around 40 points to 6,177.

Much of this week’s focus will center around the U.S. Federal Reserve’s two-day policy meeting, concluding on Wednesday, with economists broadly expecting a 75 basis point hike to interest rates by the central bank.

The European Central Bank last week kick-started its own hiking cycle with a 50 basis point increase, larger than previously suggested.

Hawkish ECB policymaker Robert Holzmann told an Austrian broadcaster on Sunday that the Governing Council will consider the economic landscape across the euro zone before determining whether another big rate hike will be feasible in September.

Shares in Asia-Pacific were mostly lower overnight as concerns about a global economic downturn put the brakes on a recent return to risk-on sentiment for investors, with traditional safe haven bonds and the dollar finding substantial bids.

U.S. stock futures were fractionally lower in early premarket trade, coming off a positive week on Wall Street as traders brace for a barrage of corporate earnings and assess the Fed’s future rate hiking trajectory.

Corporate earnings will also be a key driver of stock market movement in Europe, with UBS, Unilever, LVMH, Credit Suisse, Deutsche Bank, Daimler, Shell, Barclays, Nestle and Renault among the major players reporting throughout the week.

Notable earnings due before the bell on Monday include Ryanair, Vodafone, Philips, Faurecia and Julius Baer.

On the data front, German retail sales and the Ifo business climate index for July are expected mid-morning.

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