European Stocks Slip as Traders Eye Fed’s Rate Decision and Key Economic Data

European shares began the week on a cautious note, with the pan-European STOXX 600 index down 0.3% as of 0710 GMT on Monday. Traders are bracing for a highly anticipated rate cut by the U.S. Federal Reserve, with many expecting a larger-than-forecast reduction.

All major European markets and most sector sub-indexes were trading in the red as investors awaited the Fed’s rate decision on Wednesday. Money markets currently show a 60% probability of a 50-basis-point interest rate cut, with further easing totaling 120 basis points by the end of 2024. A bigger rate cut could signal deeper concerns about the U.S. economy, influencing global markets.

Closer to home, investors are looking ahead to Italy’s consumer price index (CPI) for August, due at 0800 GMT, followed by the eurozone’s July trade balance data at 0900 GMT. These releases will provide further insight into the health of the European economy amid ongoing inflationary pressures and concerns about slowing growth.

Corporate Movers

On the corporate front, France’s Rexel surged 12.6% after rejecting a $9.4 billion acquisition bid from Brad Jacobs’ QXO group, boosting sentiment in Paris-listed stocks.

Meanwhile, shares of Swiss food giant Nestlé weighed on the broader index, falling nearly 1% after Morgan Stanley downgraded the stock to “underweight” and reduced its price target. The downgrade reflects concerns about the company’s growth prospects amid challenging macroeconomic conditions.

As the week unfolds, market sentiment is likely to be driven by the Fed’s decision and ongoing developments in Europe’s economic outlook.