European Stocks Extend Losses Amid Global Market Weakness

Continued Decline Mirrors Asian and Wall Street Trends

European stock markets sustained losses on Monday, echoing the downward trajectory witnessed in Asian markets overnight and fueled by Friday’s downturn on Wall Street. The impending release of pivotal U.S. inflation data added to the prevailing apprehension among investors.

European Indices Under Pressure

As of 03:10 ET (08:10 GMT), the DAX index in Germany, the CAC 40 in France, and the FTSE 100 in the U.K. all exhibited declines, trading 0.7%, 0.4%, and 0.2% lower, respectively. The prevailing sentiment in European equities mirrored the global selloff, with regional markets following the sharp decline observed in Wall Street, particularly in the technology sector.

Japanese Economic Indicators Influence Market Sentiment

Market sentiment in Europe was influenced by the substantial drop in Japan’s Nikkei 225 index, which plummeted over 2% following an upward revision in the country’s GDP figures for the fourth quarter. The avoidance of a recession provided the Bank of Japan with greater flexibility to potentially adjust interest rates during its upcoming meeting next week.

Focus on U.S. Inflation Data

With minimal significant economic data in Europe on Monday, investor attention remained fixated on Tuesday’s release of U.S. inflation data. Market participants sought insights into the Federal Reserve’s potential timing for interest rate adjustments, a topic that gained prominence following comments from Fed Chair Jerome Powell signaling a likelihood of rate cuts later in the year, contingent upon confirmation of subdued inflationary pressures.

European Central Bank’s Projections and Corporate News

Last week, the European Central Bank revised its growth and inflation projections downward, with President Christine Lagarde suggesting a potential start to a rate-cutting cycle in June. The ongoing corporate earnings season drew attention, particularly with Currys stock plummeting by 10% after U.S. investor Elliott Advisors announced its intention not to make an offer for the British electronics retailer. Meanwhile, HelloFresh faced scrutiny after experiencing a significant decline of over 40% in its stock value on Friday due to lowered earnings expectations for 2024.

Stabilization in Oil Prices Amid Demand Concerns

Oil prices stabilized on Monday following significant losses the previous week, with market focus centering on concerns over slowing demand, particularly from China. By 03:10 ET, U.S. crude futures traded marginally lower at $77.97 a barrel, while the Brent contract edged up by 0.1% to $82.15 a barrel. Despite China’s increased imports of crude oil in the first two months of the year compared to 2023, demand remained subdued relative to previous months.

Gold Futures and Currency Market Movements

Gold futures experienced a modest uptick of 0.1%, reaching $2,188.45/oz, while EUR/USD exhibited a marginal increase of 0.1%, trading at 1.0939. These movements underscored the cautious sentiment prevailing in the markets, as investors navigated ongoing global economic uncertainties.