European Stocks Muted as Investors Cautious Ahead of Fed Meeting
European stocks were muted as investors adopted a wait-and-see approach ahead of an expected Federal Reserve interest-rate cut later this week, while digesting hawkish comments from the European Central Bank.
The Stoxx Europe 600 Index edged 0.1% lower at the close. Banks and industrials led gains, while real estate lagged.
Among individual stocks, ASM International rose 6.9% after Morgan Stanley highlighted the chip-equipment maker as a top pick and raised its earnings estimates. Unilever Plc’s spinoff The Magnum Ice Cream Co. rose to trade slightly above its technical reference price on its market debut, which followed a separation aimed at giving the world’s biggest ice cream company a platform to revive its performance as a standalone firm.
The Fed decision will “set the tone for the first half of the week,” said Geoff Yu, senior macro strategist at BNY. “On inflation at least, it seems like the US is diverging from much of its peers, and that will have implications for asset allocation.”
The benchmark is within 1% of its all-time record hit in November, as fears over potentially excessive AI stock valuations have been outweighed by the prospect of further monetary easing in the US. Wagers of a Fed rate cut currently stand at over 90%.
That contrasts with investor sentiment around the interest-rate path of the ECB, where Executive Board member Isabel Schnabel said she’s comfortable with bets that the central bank’s next move will be an increase — while noting borrowing costs are at levels that will be appropriate for some time.
Source : Bloomberg.com
