lower edge European stock futures; Caution before the Fed meeting

lower edge European stock futures;  Caution before the Fed meeting

Written by Peter Norse – European stock markets are expected to open slightly lower on Monday, with activity likely to be limited with the UK on holiday and ahead of week’s central bank meetings, including the Federal Reserve meeting.

At 02:00 ET (06:00 GMT), the contract in Germany was down 0.3%, in France it was down 0.5%, while the contract in the UK was closed.

Investors are likely to be cautious on Monday ahead of 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 rise by the Fed, given its stubbornness, and this is likely to limit moves ahead of Wednesday’s official announcement.

However, losses are likely to be limited with sentiment in Europe aided by the news that the repurchase rate will be lowered and more liquidity will be injected into the economy.

The central bank is seeking to boost growth in the world’s second-largest economy, a major driver of regional growth, which has been hit hard by the COVID-19 lockdowns.

In addition, the UK market is holidaying at the funeral of Queen Elizabeth II.

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.

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Thursday will be a busy day, when policy-setting meetings will take place.

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 and

The Eurozone PMI has already spent two months below the 50 level separating 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) said Sunday it is targeting a valuation of up to 75 billion euros ($75.1 billion) for luxury carmaker Porsche, in what would be Germany’s second largest initial public offering in history.

Oil prices rose on Monday, boosted by the easing of some coronavirus restrictions in China, adding to optimism about a recovery in demand in the world’s largest importer of crude.

China began easing restrictions in the southwestern city of Chengdu, which has a population of more than 21 million and is the largest city facing lockdowns after Shanghai earlier this year. The move is expected to boost economic activity in the city.

By 02:00 ET, futures were up 0.1% at $85.82 a barrel, while the contract was up 0.3% at $91.59.

In addition, it was down 0.5% to $1,675.50 an ounce, while trading was down 0.4% at 0.9980.

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