European stock markets experienced a slight decline on Monday as investors prepared for a week filled with central bank meetings, including the U.S. Federal Reserve’s gathering.
At 03:35 ET (07:35 GMT), the DAX index in Germany traded 0.3% lower, the CAC 40 in France dropped 0.5%, while the FTSE 100 in the U.K. traded largely unchanged.
Caution Ahead of Central Bank Meetings
The new week began with caution, with investors reversing some of the previous week’s gains. Last week, investors found comfort in signs that the European Central Bank (ECB) was nearing the end of its interest rate hikes.
The ECB raised interest rates to a record high of 4% on Thursday but indicated in the accompanying press release that this hike might be its last due to the struggles of the eurozone economy.
ECB policy makers, including Luis de Guindos, Frank Elderson, and Fabio Panetta, are scheduled to speak on Monday. Their comments will be closely analyzed for signs of dissent among the more hawkish members of the group regarding the indication of an end to the year-long rate-hiking cycle.
Federal Reserve Leading the Way
This week will see several major central banks hold policy-setting meetings, including the Bank of England on Thursday and the Bank of Japan on Friday. However, the highlight will be Wednesday’s Federal Reserve gathering, where the U.S. central bank is widely expected to announce a pause in its series of interest rate increases.
Despite this expected pause, the recent surge in U.S. consumer inflation, driven by higher gasoline prices, is likely to keep the Fed’s hawkish outlook intact, signaling higher-for-longer rates.
Challenges for Chipmakers
In Europe, Nordic Semiconductor (OL:NOD) saw its stock plummet by nearly 15% after cutting its revenue guidance for the third quarter. However, its challenges are not unique, as Taiwan Semiconductor Manufacturing (NYSE:TSM), the world’s largest contract chipmaker, reportedly asked its suppliers to delay deliveries due to concerns about slowing demand.
Societe Generale (EPA:SOGN) also faced a setback, with its stock falling almost 6%. The bank’s new CEO, Slawomir Krupa, pledged to cut costs to boost profits by 2026 amid stagnating sales, marking his first strategic plan for France’s third-largest listed bank.
Crude Oil Extends Rally
Oil prices continued to rise on Monday, driven by expectations of a tighter market ahead of central bank policy-setting meetings this week. Over the past three months, crude benchmarks have surged over 30% following supply cuts from Saudi Arabia and Russia, which could push the market into a substantial deficit in the fourth quarter.
Investors are closely watching central bank decisions and commentary on interest rate policies, along with key economic data from China.
By 03:35 ET, U.S. crude futures were up 0.8% at $90.70 a barrel, while the Brent contract climbed 0.6% to $94.51.
Additionally, gold futures rose 0.1% to $1,948.95 per ounce, and EUR/USD traded 0.1% higher at 1.0665.