European shares cautiously lower ahead of Fed meeting

European shares cautiously lower ahead of Fed meeting

Written by Peter Norse

Investing.com – European stock markets weakened on Monday, with investors nervous ahead of this week’s series of central bank meetings, including the Federal Reserve, which are expected to lead to further monetary tightening.

By 03:45 EST (07:45 GMT), trading in Germany was down 0.5%, in France it was down 1.1%, while the UK was closed due to the funeral of Queen Elizabeth II.

The main focus this week will be on the two-day US meeting, which begins on Tuesday, which is widely expected to raise interest rates by another 75 basis points.

There is still a surprise 100 basis point hike by the Fed, given its stubbornness, and that will likely weigh in before the official announcement on Wednesday.

The Fed is not the only central bank in play this week.

It meets on Thursday, with its meeting postponed by a week after the death of Queen Elizabeth II, and is expected to raise interest rates by another 50 basis points. This comes ahead of a mini budget by new Treasury Secretary Kwasi Quarting on Friday.

Thursday will be a busy day, with policy-setting meetings taking place.

Today’s weakness occurs despite news that the People’s Bank of China has cut and also increased its injection of liquidity into the economy, as the central bank seeks to boost growth in the world’s second-largest economy, a key driver of regional growth, which has been hit hard by the COVID lockdowns. -19.

The list of economic data is largely empty on Monday, but the first look at European business activity in September comes on Friday with the release of PMI data from the Eurozone and Eurozone.

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It has already spent two months below the 50 level that separates contraction from expansion, and the risk of a recession in the eurozone has reached its highest level since July 2020.

Economists polled by Bloomberg now put the probability of a contraction in two consecutive quarters at 80% in the next 12 months, up from 60% in a previous survey.

In corporate news, Volkswagen (ETR:) stock rose 1.1% after news that the auto giant is targeting a valuation of up to 75 billion euros ($75.1 billion) for luxury carmaker Porsche, in what would be the second largest initial public offering in Germany. in history.

Oil prices fell on Monday, reversing earlier gains as fears of a global recession triggered fears of slowing demand growth.

The market rose earlier on Monday after China began easing restrictions in the southwestern city of Chengdu, home to more than 21 million people and the largest city facing lockdowns after Shanghai earlier this year.

By 03:45 ET, the futures contract was down 1.1% at $83.82 a barrel, while the contract was down 0.8% to $90.66.

In addition, it was down 0.9% to $1,669.15 an ounce, while trading was down 0.4% at 0.9978.

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