Mixed Performance in European Stocks as Investors Exercise Caution Ahead of Key Inflation Data

Photo credit -  Deutsche Börse AG

European stock markets exhibited a mixed performance on Monday, as investor risk appetite remained subdued at the onset of a week featuring crucial inflation data releases from the U.S., Japan, and China. As of 03:05 ET (08:05 GMT), the DAX index in Germany saw a modest 0.1% gain, while the CAC 40 in France dipped 0.1%, and the FTSE 100 in the U.K. fell 0.3%. Last week saw a retreat in European equities, driven by adjusted expectations of early interest rate cuts in the U.S., as well as similar expectations for the European Central Bank and the Bank of England.

The change in sentiment was reinforced by a surprising surge in U.S. nonfarm payrolls and a rise in eurozone inflation to 2.9% in December, supporting the case for the European Central Bank to maintain record-high interest rates. This week, investors are closely watching inflation data from Japan and China, with the highlight being Thursday’s U.S. Consumer Price Index (CPI), where prices are expected to rise by 0.2% month-on-month and 3.2% annually. The outcome is likely to influence expectations regarding the Federal Reserve’s future interest rate decisions.

In Germany, industrial orders for November grew by a lower-than-expected 0.3% month-on-month, compared to the anticipated 1%, marking a minor recovery from the previous month’s revised 3.8% decline. In the corporate realm, Airbus stocks rose by 1% following the challenges faced by rival Boeing, as the U.S. Federal Aviation Administration ordered a temporary grounding of some 737 MAX 9 jets.

The upcoming earnings season is set to kick off later in the week, featuring major U.S. banks such as JPMorgan Chase, Bank of America, and Citigroup reporting their fourth-quarter and full-year results on Friday.

Crude oil prices experienced a decline on Monday after Saudi Arabia cut the prices of its Asian crude exports to levels not seen in over two years, contributing to concerns about global demand weakness. As of 03:05 ET, U.S. crude futures were down 1.2% at $72.96 per barrel, while the Brent contract dropped 1% to $77.97 per barrel. Despite worries about global economic activity, both benchmarks had climbed more than 2% the previous week due to rising geopolitical tensions in the Middle East following attacks by Yemeni Houthis on ships in the Red Sea.

Furthermore, gold futures fell by 0.7% to $2,036.05 per ounce, and the EUR/USD pair traded 0.1% lower at 1.0939.