European shares muted as investors brace for data-packed week

Published On : 08/12/2024

By Pranav Kashyap and Ankika Biswas

(Reuters) -gtgEurope’s benchmark stock index was subdued on Monday, erasing early gains, with investors bracing for key U.S. inflation numbers to gauge the Federal Reserve’s monetary policy path amid lingering recession fears and a deluge of other European data.

The STOXX 600 index closed on a flat note, after last week’s muted performance as the continent-wide index rebounded from last Monday’s sharp selloff in risk assets on U.S. recession fears.

Energy and basic resources led sectoral gains, tracking a strong rise in oil and metal prices, while real estate was the worst hit, with a 0.9% decline.

Insurance stocks were also among top gainers, as Hannover Re climbed 5% after the German reinsurer reported better-than-expected results.

All eyes are on the U.S. consumer and producer prices data and Europe’s employment and GDP flash numbers, due through the week’s course.

Investors are focused on hopes of a rate cut by the U.S. Fed, especially after recession fears in the United States sparked a global markets selloff last week, which was later partially offset by encouraging jobs data.

“Market pricing suggests traders remain nervous about the steady-as-she-goes assessment of policy rates, and the volatility of last week perhaps serves as a warning that we could be only one or two bad prints away from further turmoil,” said Benjamin Picton, a senior macro strategist at Rabobank.

“This week will throw up a number of opportunities to upset the narrative and allow volatility to rear its ugly head again.”

The U.S. central bank meets on Sept. 18-19 and traders are pricing in a 46% chance of 50-basis-point cut.

Topping the STOXX 600, BT Group jumped 8.4% after India’s Bharti Enterprises agreed to buy around a 24.5% stake from the British telecommunication firm’s top shareholder, Altice UK.

Orlen rose nearly 5% after Poland’s top refiner reported preliminary Q2 results above estimates.

Vestas dropped almost 8% to the bottom of the STOXX 600 after the world’s largest wind-turbines maker warned of a second quarter loss and trimmed its full-year profit margin and revenue outlook.

JD Sports Fashion fell 4% after Deutsche Bank downgraded the British sportswear retailer’s stock to “sell” from “hold”.

Trading volumes in August are expected to be relatively lower as many market participants are off for the summer.

(Reporting by Pranav Kashyap and Ankika Biswas in Bengaluru; Editing by Sherry Jacob-Phillips, Mrigank Dhaniwala and Shreya Biswas)

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