European Stocks Steady As U.S. Inflation Awaited For Fed Clues
European stocks edged lower as investors awaited a US inflation report, due Thursday, for clues about the path of Federal Reserve interest rate cuts.
(Bloomberg) -- European stocks were little changed as investors awaited a US inflation report Thursday for clues about the path of Federal Reserve interest rate cuts.
The Stoxx Europe 600 slipped less than 0.1% at 9:48 a.m. in London. Real estate and consumer stocks outperformed while commodities and construction stocks lagged.
Among individual movers, UK bakery chain Greggs Plc rose after annual revenue beat the average analyst estimate. UK grocer J Sainsbury Plc dropped after a boom in food over the Christmas period was offset by weak sales of clothing and general merchandise. BE Semiconductor Industries NV fell after being downgraded at Deutsche Bank.
Investors are bracing for US consumer price index figures after the start of 2024 saw traders readjusting their expectations for the extent of rate cuts this year. European stocks dropped in the first week of January after a strong fourth-quarter rally and as the market awaits more definitive signals of central bank easing.
The earnings season will also be in focus over the next few weeks, with analysts slashing estimates in the runup to the announcements.
The economic outlook is still gloomy for the first half, pressuring the highly cyclical European market, and the earnings cycle continues to see “significant weakening,” said Leonardo Pellandini, an equity strategist at Bank Julius Baer.
“We expect rate cuts to start toward the latter part of the first half of 2024, as inflation should be under control by then and economic growth welcome again,” he said. “As such, we recommend investors to wait for a better entry opportunity toward the second half of 2024.”
For more on equity markets:
- Cheap UK Stocks Are a Hedge Against Market Turmoil: Taking Stock
- M&A Watch Europe: Roche, Campari, Pennon, Belvoir Group, TPFG
- Ferrovial US Move Shows Pressure on Smaller Exchanges: ECM Watch
- US Stock Futures Little Changed; Aehr Test Systems Falls
- Shoppers Hold Off on Big-Ticket Purchases: The London Rush
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--With assistance from Michael Msika.
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