European stock markets displayed a subdued performance on Monday, marking the beginning of a week influenced by holidays and a slowdown in quarterly corporate earnings.
As of 03:05 ET (08:05 GMT), Germany’s DAX index traded 0.1% lower, the U.K.’s FTSE 100 fell by 0.3%, and France’s CAC 40 experienced a modest uptick of 0.2%.
Last week witnessed significant gains in the main European equity indices, particularly the German DAX, which surged by 3.7%. This surge followed data indicating a substantial decline in inflation, fueling optimism that the European Central Bank might be concluding its prolonged rate-hiking cycle.
Eurozone inflation confirmed an annual rate of 2.9%, down from the previous month’s 4.3%, while the U.K. Consumer Price Index decreased to 4.6% in October from 6.7% in September.
This trend persisted on Monday, with German producer prices recording an 11.0% decline in October year-on-year, continuing a downward trajectory after a record fall in September.
Despite these developments, policymakers, including Bundesbank President Joachim Nagel, have emphasized the premature nature of any considerations for the ECB to cut interest rates, emphasizing that inflation still exceeds the target.
Several central bankers, including Bank of France Governor de Galhau, Bank of Spain Governor de Cos, and Bank of England Governor Bailey, are scheduled to speak on Monday. Analysts will closely scrutinize their statements for insights into future monetary policy.
Corporate Earnings and Market Movements
In the corporate sector, as the European quarterly earnings season winds down, Compass Group (LON:CPG) saw its stock dip by 5.5% after missing full-year profit expectations. The U.K.-based catering company cited “macroeconomic uncertainty” but opted to increase its dividend and announce a further share buyback of up to $500 million.
Meanwhile, Ashtead (LON:AHT) experienced a significant 14% decline in stock value following a profit warning. The U.K. industrial equipment rental company attributed the warning to a quieter hurricane season and the extended duration of the U.S. writers’ strike.
Looking ahead, tech giant Nvidia (NASDAQ:NVDA) is set to report quarterly results on Tuesday, with a particular focus on the demand for its AI-related products. However, trading activity is expected to be limited on Thursday due to the Thanksgiving holiday.
Oil Prices Rise Amid Output Cut Speculation
On the commodities front, oil prices saw an increase on Monday, building on recent gains. Reports surfaced suggesting that a group of major producers may discuss deeper output cuts when they convene later this month.
As of 03:05 ET, U.S. crude futures traded 0.7% higher at $76.60 a barrel, while the Brent contract climbed 0.6% to $81.11 a barrel. Oil prices had experienced a nearly 20% drop since late September, driven by concerns about demand growth and eased worries regarding Middle East supply disruptions amid the Israel-Hamas conflict.
However, crude oil rebounded by 4% on Friday and continued its upward trajectory on Monday following reports that the Organization of the Petroleum Exporting Countries and their allies (OPEC+) are considering additional oil supply cuts to stabilize prices during their meeting on Nov. 26. OPEC+ has already committed to total oil output cuts of 5.16 million barrels per day, equivalent to about 5% of daily global demand, in a series of steps initiated in late 2022.
Additionally, gold futures dipped by 0.2% to $1,981.50 per ounce, while the EUR/USD pair traded 0.2% higher at 1.0926.
