European markets set to open sharply lower as investors digest OPEC deal

• European stocks are expected to open sharply lower on Monday as markets digest the latest OPEC + announcement regarding oil production and continue to brood on inflation.
• Britain's FTSE is seen opening 50 points lower at 6,953, Germany's DAX 85 points lower at 15,440, France's CAC 40 down 36 points at 6,416 and Italy's FTSE MIB down 208 points at 24,472, according to IG.

European stocks are expected to open sharply lower on Monday as markets digest the latest OPEC + announcement regarding oil production and continue to brood on inflation.

Britain's FTSE is seen opening 50 points lower at 6,953, Germany's DAX 85 points lower at 15,440, France's CAC 40 down 36 points at 6,416 and Italy's FTSE MIB down 208 points at 24,472, according to IG.

European markets look set to follow their counterparts in Asia Pacific lower on Monday as investors digest the news that OPEC and its allies (a group known as OPEC+) reached a deal on Sunday to phase out 5.8 million barrels per day of oil production cuts by September 2022. Coordinated increases in oil supply from the group will start in August, OPEC said in a statement.

The development comes after Brent has surged more than 40% so far in 2021, with demand for crude rising as the global economy recovers from the pandemic.

On Monday morning, international benchmark Brent crude futures slipped 0.87% to $72.95 per barrel. U.S. crude futures also declined 0.93% to $71.81 per barrel.

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U.S. stock index futures were lower during overnight trading on Sunday, after the major averages posted their first negative week in four.

Inflation fears are weighing on stocks after the Consumer Price Index in the U.S. last week showed that inflation jumped 5.4% in June year-over-year, spooking investors. Separately. a U.S. consumer sentiment index from the University of Michigan released on Friday showing that consumers believe prices will jump 4.8% over the next year. This is the steepest climb since August 2008.

Meanwhile, in Europe, the devastation caused by massive flooding around Germany and Belgium could weigh on sentiment in the region this week, as well as ongoing coronavirus concerns.

A surge in Covid-19 cases across the continent caused by the highly transmissible delta variant continues to weigh, with several major European countries forced to reimplement social restrictions, while the U.K. is set to lift most remaining restrictions on Monday despite reporting a high number of daily cases.

There are no major earnings Monday; data releases include U.K. house price data from Rightmove and euro zone construction output.

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– CNBC's Eustance Huang and Pippa Stevens contributed to this market report.

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