LONDON (IT BOLTWISE) – Despite positive economic news from China, European stock markets are cautious. Investors are concerned about the US Federal Reserve’s upcoming interest rate decision and growing trade tensions between the EU and China. These uncertainties are weighing on the markets, although some indices recorded slight gains.
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The European stock markets are currently taking a wait-and-see approach, although there are positive economic signals coming from China. This reluctance is mainly due to the upcoming interest rate decision by the US Federal Reserve (Fed), which is causing investors to manage their positions cautiously. Uncertainty about the Fed’s future interest rate policy, particularly with regard to combating inflation and supporting the labor market, is causing jitters among investors.
In addition to the uncertainties surrounding the Fed’s interest rate decision, growing trade conflicts between the European Union and China are weighing on the markets. French President Emmanuel Macron has brought possible countermeasures into play to respond to China’s trade restrictions. These tensions add to uncertainty and negatively impact both European and global markets.
In terms of market activity, the EuroStoxx 50 saw a marginal increase of 0.03 percent, while the UK’s FTSE 100 saw a decline of 0.23 percent. The Swiss SMI, on the other hand, was able to close with a gain of 0.35 percent, which was primarily supported by positive developments in the industrial market. These mixed results reflect the uncertainties currently facing markets.
Gunter Deuber, chief economist at Raiffeisen Bank International, highlights the current uncertainty within the Fed. The disagreement relates to deciding whether the focus should be on fighting rising inflation or supporting the weak labor market. Given that inflation has been lower than expected so far, a rate cut seems more likely, which has an additional impact on the markets.
Within the EuroStoxx 50, Bayer and Rheinmetall stood out. Bayer posted a notable 4.7 percent gain, driven by a positive rerating from JPMorgan analyst Richard Vosser. Rheinmetall recorded an increase of 3.6 percent. On the negative side, Ferrari shares fell 3.5 percent due to an analyst downgrade by Morgan Stanley. L’Oreal fell 2.0 percent but plans to increase its stake in Swiss dermatology specialist Galderma, which caused the latter’s shares to rise 1.0 percent.
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