by Diana Mandia
(Reuters) – European stock markets ended lower on Monday, weighed down by difficulties in the automobile sector and geopolitical tensions, while investors remained cautious before the publication of inflation figures in the euro zone.
In Paris, the CAC 40 lost 2% to 7,635.75 points. In Frankfurt, the Dax fell 0.68% and in London, the FTSE 100 dropped 1.01%.
The EuroStoxx 50 index fell by 1.23%, the FTSEurofirst 300 by 0.97% and the Stoxx 600 by 0.95%.
The CAC 40, on the other hand, gained 0.06% over the month and advanced 2.09% over the quarter.
The European stock markets close the month and the quarter weighed down by the automobile sector, which lost 4% on Monday after warnings on results from Stellantis, Volkswagen and Aston Martin, in a new series of warnings against Chinese competition, the deterioration of demand, rising costs and the risks posed by trade conflicts between Beijing and Brussels.
Mercedes-Benz and BMW had already cut their forecasts due to weakening demand in China, the world’s largest auto market, a sign that the sector is facing tough times.
Continued Israeli attacks on Lebanon and fears of an IDF ground offensive in the south of the country also weighed on sentiment.
Investors were also particularly cautious at the start of a week full of key indicators, including September inflation in the euro zone forecast for Tuesday, which, according to analysts, should fall below the 2% target. of the ECB for the first time since mid-2021.
This would reinforce expectations of a third cut in borrowing costs since those of June and September, a prospect that Christine Lagarde, president of the ECB, helped to encourage by telling members of the European Parliament’s Economic Affairs Committee on Monday that Frankfurt was increasingly convinced that inflation would return to its target and that this should be reflected in its October decision.
Data published on Monday also showed that inflation in Germany had slowed to 1.8% year-on-year in September, more than expected, reaching its lowest rate since February 2021. Inflation is also decelerating in France, Italy and Spain.
Traders see there as being around an 83% chance that the ECB will cut rates in October after the release of German data and Christine Lagarde’s comments, up from around 75% last Friday.
In the United States, comments from Fed Chairman Jerome Powell will also be assessed later today. Traders estimate a 37% chance of a 50 basis point rate cut in November.
VALUES
Stellantis (-14%), Volkswagen (-4.2%) and Aston Martin (-24%) ended in the red on Monday after their profit warnings.
In Paris, Renault fell 5.5%, recording the worst performance of the CAC 40, while in Frankfurt, Mercedes and BMW dropped around 2.4%.
A WALL STREET
The New York Stock Exchange is in the red on Monday after the previous week’s rally, showing caution ahead of the numerous employment reports expected this week and comments from Federal Reserve Chairman Jerome Powell, who was expected to express Monday.
At closing time in Europe, the Dow Jones lost 0.31% and the Standard & Poor’s 500 0.03%, while the Nasdaq Composite gained 0.04%.
The US auto sector is also suffering from the downward revision of the outlook for Stellantis and Volkswagen, with Ford and General Motors dropping by 2% to 3.9%.
TODAY’S INDICATORS
Gross domestic product (GDP) rose 0.5% between April and June in the UK, slightly below the preliminary estimate of 0.6% growth, but household finances and investment of businesses have shown positive signs, according to figures from the Office for National Statistics (ONS).
CHANGES
The dollar, which had fallen in reaction to data on American inflation showing last Friday that prices continued to slow, recovered slightly and gained 0.32% against a basket of reference currencies, while awaiting the comments from Jerome Powell and the indicators expected this week.
The euro in turn lost 0.24% to 1.1136 dollars.
RATE
Eurozone bond yields fell on Monday as slowing German inflation and comments from the ECB president reassured traders of the possibility of a further rate cut in October.
The ten-year German Bund yield lost 0.8 basis points to 2.1310%. The two-year, for its part, dropped 1.4 basis points to 2.0710%.
In the United States, bond yields increased before Jerome Powell’s speech: that of ten-year Treasuries gained 3.4 basis points to 3.7828%, while its two-year counterpart gained 5 basis points to 3. 6144%.
OIL
Oil prices hesitate on Monday and are on track to experience their third consecutive monthly decline, the good supply outlook and doubts about demand outweighing the risks linked to military escalation in the Middle East.
Brent lost 0.04% to $71.95 per barrel, while American light crude (West Texas Intermediate, WTI) gained 1.36% to $69.11.
TO BE FOLLOWED ON OCTOBER 1:
French Prime Minister Michel Barnier is due to deliver his general policy speech from 1:00 p.m. GMT.
(Some data may have a slight lag)
(Written by Diana Mandiá)
Copyright © 2024 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
