European Stocks Slip as Investors Eye Fed Policy Outlook and Key U.S. Inflation Data

European markets opened the week slightly weaker on Monday, with investors opting for caution as they awaited crucial U.S. inflation data and fresh commentary from Federal Reserve policymakers following last week’s rate cut. At 03:05 ET (07:05 GMT), Germany’s DAX fell 0.3%, France’s CAC 40 edged 0.1% lower, and the FTSE 100 in the U.K. dropped 0.1%.

Wall Street’s record highs after the Fed’s policy shift offered some positive cues, but optimism has faded as uncertainty lingers over the pace of future rate cuts. Markets are currently pricing in 44 basis points of additional easing across the Fed’s remaining two meetings this year. Traders will closely watch speeches from Fed officials, including John Williams, Thomas Barkin, Stephen Miran, Raphael Bostic, Michelle Bowman, and particularly Chair Jerome Powell on Tuesday, for direction.

The highlight of the week will be Friday’s release of the personal consumption expenditures (PCE) price index, the Fed’s preferred inflation measure. Economists expect annual PCE inflation to rise to 2.8% in August, up from 2.6% in July, reinforcing the delicate balance between easing growth risks and containing price pressures.

In Europe, attention will also turn to a flash estimate of eurozone consumer confidence later Monday, as political and economic headwinds continue to weigh on sentiment.

Elsewhere, the People’s Bank of China left its loan prime rate unchanged for the fourth consecutive month, as widely expected, while trade relations remain in focus after the U.S. and China reached a consensus last week on the U.S. operations of TikTok.

On the corporate front, Ericsson secured an eight-year, $1.3 billion deal to supply 5G equipment to VodafoneThree’s U.K. mobile network. The deal follows Vodafone and CK Hutchison’s merger of their British operations in June, creating VodafoneThree, which has pledged £11 billion ($14.8 billion) in investments over the next decade to build one of Europe’s most advanced 5G infrastructures.