European stock markets saw an upward trend on Monday, buoyed by positive closures on Wall Street the previous week. However, concerns persist among investors regarding the global growth outlook due to restrictive monetary policies.
As of 04:10 ET (09:10 GMT), Germany’s DAX index traded 0.5% higher, France’s CAC 40 was up 0.7%, and the U.K.’s FTSE 100 climbed 0.7%.
Weak Eurozone Economic Outlook
The positive start to the week follows significant gains on Wall Street, primarily driven by robust performances in tech and growth stocks, coupled with stabilized Treasury yields. Yet, these gains remain uncertain as the economic outlook for the eurozone deteriorated last week, heightening the risk of a late-year or early-next-year recession.
Compounding these concerns is the weakened state of China, the second-largest global economy and a crucial export market for several major European companies. Data from China’s Singles Day shopping event over the weekend, akin to Black Friday in the U.S., showed modest growth, indicating consumer confidence remains subdued.
Investor attention is now focused on the upcoming U.S.-Sino Presidential meeting, with hopes for a potential improvement in relations between the two largest economies globally.
Central Bankers in the Limelight
Worries persist among investors about the likelihood of global central banks maintaining higher interest rates to combat inflation. European Central Bank President Christine Lagarde recently affirmed that rates will remain restrictive for several quarters. Today, her deputy, Luis de Guindos, is set to deliver the keynote speech at Euro Finance Week.
Federal Reserve Chair Jerome Powell expressed uncertainty last week, stating that officials are not yet confident that interest rates are sufficiently high to address inflation. With several Fed officials scheduled to speak during the week, their insights will be scrutinized closely, especially following Moody’s downgrade of the U.S. sovereign debt rating on Friday.
Corporate Highlights
Volkswagen (ETR:VOWG) witnessed a 0.7% increase after reports indicated potential administrative job cuts as part of the company’s cost-cutting measures.
Novo Nordisk (CSE:NOVOb) shares surged by 3% following data revealing the heart-protective benefits of its popular Wegovy obesity treatment extend beyond weight loss alone.
Phoenix Group (LON:PHNX) experienced a 7.8% increase in stock value after the insurer raised its full-year cash generation forecast.
Crude Oil Prices Decline
Oil prices retreated on Monday due to persistent concerns over slowing global demand, particularly from China, the world’s largest crude oil importer. U.S. crude futures traded 0.2% lower at $77.02 a barrel, while the Brent contract dropped 0.2% to $81.28 a barrel by 04:10 ET. Despite gains on Friday, both benchmarks recorded losses of about 4% for the week, marking their third weekly losses since May.
In addition, gold futures rose by 0.2% to $1,940.60/oz, and EUR/USD traded 0.1% higher at 1.0689.
