Investors worry about further monetary tightening and oil drops to two-month lows over China's Covid concerns.

As investors worry about the possibility of further monetary tightening and its potential effects on future economic development, European stock markets are anticipated to open lower on Monday.

Around 7:00 GMT, Germany's DAX futures contract was down by 0.3%, France's CAC 40 futures fell by 0.4%, and the UK's FTSE 100 futures contract declined by 0.3%.

Recent U.S. consumer and producer inflation readings, which were lower than expected, gave the world's stock markets a lift as investors believed the U.S. Federal Reserve would change course from aggressive interest rate hikes.

While there is still work to be done to control inflation, several Fed policymakers have attempted to temper such expectations by asserting that prices have peaked.

The situation is different in Europe, where the annual measure of inflation for the Eurozone surged beyond 10% at the end of September from 9.9%.

Christine Lagarde, president of the European Central Bank, stated on Friday that in order to manage inflation at those uncomfortably high levels, interest rates will need to be raised to levels that limit economic growth. This means it will likely raise rates again in December, marking the fourth straight increase. The ECB has increased rates by 200 basis points since July.

In light of this, investors will receive additional guidance on the outlook for interest rates from the minutes of the ECB meeting and the Fed meeting later this week.

Oil prices dropped to two-month lows on Monday as China's concerns over COVID, the world's largest crude importer, knocked on demand.

The number of new COVID cases in China stayed very close to the highs seen in April, while the nation experienced its first Covid-related death in nearly six months on Saturday and two more on Sunday.

Around 7:00 GMT, the price of US oil futures fell 0.7% to $79.59 per barrel, while the price of the Brent contract dropped by 0.7% to $86.97.

With the U.S. contract down 10% and Brent down 9% last Friday’s session, both benchmarks closed at their lowest levels since September 27th, marking the largest weekly fall since August.

Earnings due today:

• British American Tobacco PLC
• Agilent Technologies
• Dell Tech
• Zoom Video

(Sources: investing.com, reuters.com)