European Markets Attempted a Rebound Ahead of Monetary Policy Decisions Later This Week

Bridgette Randall
09 Sep, 2024
London

European markets rebounded amid widespread expectations of a rate cut later in the week.

Benchmark indexes in Paris, London, and Frankfurt advanced 0.6% in active trading, and investors awaited the release of final updates on inflation in Germany, France, and Spain later in the week. 

The European Central Bank is expected to lower rates by 25 basis points at the end of its policy meeting on Thursday, and investors are looking ahead to revised economic projects for the year. 

Consumer price inflation in the eurozone is on a downward slide, but that decline in inflation is largely driven by the fall in energy prices. 

Core inflation, which strips out volatile food and energy price inflation, is still hovering above 3%, indicating that it is well-anchored in the economy and prices are still rising at a faster rate than the 2% target rate set by the European Central Bank. 

The Eurozone’s trade balance is also on tap this week. 

Investors in the U.K. are awaiting the updates on unemployment rate, trade balance, and industrial production. 

 

Europe Indexes and Yields

The DAX index increased by 0.5% to 18,402.53; the CAC-40 index rose by 0.6% to 7,393.17; and the FTSE 100 index advanced by 0.6% to 8,231.36. 

The yield on 10-year German bonds edged higher to 2.22%, French bonds inched up to 2.93%, the UK gilts edged down to 3.87%, and Italian bonds decreased to 3.51%.

The euro edged down to $1.10; the British pound inched higher to $1.30; and the U.S. dollar strengthened to 84.89 Swiss cents.

Brent crude increased $0.56 to $71.61 a barrel, and the Dutch TTF natural gas rose by €0.54 to €36.91 per MWh. 

 

Europe Stock Movers

Banks in the eurozone rebounded ahead of the expected interest rate cut later in the week. 

Deutsche Bank gained 2.9% to €15.09, UniCredit jumped 2.2% to €37.04, Societe Generale advanced 2.1% to €22.29, and BNP Paribas increased 1.2% to €62.91. 

Oil explorers rebounded in Monday's trading, tracking a technical rebound in crude oil prices after falling 8% in the previous week. 

Shell PLC gained 1% to 2,542.0 pence, and BP plc edged up 0.5% to 407.65 pence. 

Mining companies edged higher after copper edged up 2% and iron ore stabilized around a four-year low. 

Glencore Plc jumped 1.3% to 371.75 pence, Anglo American Plc advanced 0.7% to 2,040.50 pence, and Antofagasta gained 1.9% to 1,669.50 pence.

Luxury stocks were under pressure after China reported weak consumer price inflation and producer price inflation, confirming ongoing economic growth slowdown. 

Kering SA dropped 3.5% to €228.0, Hermes International increased 0.4% to €1,916.50, and LNMH Moet Hennessey inched up 0.3% to €1,916.50. 

Barratt Developments increased 0.7% to 496.23 pence, and the homebuilder and Lloyds Banking Group, along with the UK government agency Homes England, launched a £165 million joint venture. 

Entain PLC soared 8.3% to 692.20 pence, and the online gambling platform operator said its businesses in the U.K. and Ireland rebounded faster than previously estimated.