Positive Start to the Week

European equities opened Monday on a firmer note, with investors positioning themselves ahead of a critical week for global monetary policy. By 07:05 GMT, Germany’s DAX index gained 0.5%, France’s CAC 40 also climbed 0.5%, while the U.K.’s FTSE 100 inched 0.1% higher.

The upbeat tone followed last week’s rally in U.S. equities, where optimism over interest rate cuts by the Federal Reserve lifted all major indices to record highs.

Central Banks in Focus

The spotlight this week is on a series of major central bank meetings, starting with the U.S. Federal Reserve on Wednesday. Recent economic data from the U.S. highlighted a cooling labor market alongside moderated inflation, reinforcing market expectations that the Fed will cut rates, most likely by 25 basis points.

The Bank of England meets on Thursday. After delivering five rate cuts in the past year, the central bank is expected to hold steady this time as inflation remains at 3.8%—the highest in the G7 and nearly double its medium-term target.

Other monetary authorities, including those in Japan, Canada, and South Africa, are also scheduled to announce decisions this week, shaping global risk sentiment.

Weak Chinese Data Weighs on Outlook

Market sentiment was tempered by signs of a slowdown in China’s economic momentum. Industrial output rose just 5.2% year-on-year in August, the weakest since the same month last year and below July’s 5.7%. Retail sales also disappointed, expanding only 3.4%, the slowest pace since November 2024.

The weaker figures highlight persistent challenges in China’s post-pandemic recovery, raising concerns about global demand at a time when investors are already grappling with uncertainties around trade and tariffs.

Corporate Developments

In corporate news, Germany’s Rheinmetall announced an expansion into naval construction through an acquisition of the shipbuilding arm of Luerssen Group, Naval Vessels Luerssen. The deal, pending antitrust clearance, is expected to close early next year.

In the U.K., AO World lifted its profit outlook and unveiled its first-ever share buyback program, underpinned by double-digit revenue growth in the first half of 2025.

Outlook

With limited fresh European data to drive markets, investor focus this week is squarely on central bank policy signals. Rate decisions from the Fed and Bank of England, combined with weak Chinese economic indicators, will likely set the tone for risk appetite and determine whether recent equity market strength can be sustained.