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European stocks advanced on Friday, bolstered by gains in the mining sector and anticipation of a potential interest rate cut by the U.S. Federal Reserve at its upcoming meeting. The pan-European STOXX 600 index rose 0.5% to 514.5 points as of 0710 GMT, marking solid progress towards a weekly gain.
France’s CAC 40 index increased by 0.3%, following data showing that consumer prices in the country rose 2.2% year-on-year in August, aligning with earlier estimates. The positive market sentiment was further supported by strong performance in the mining sector, as copper prices surged to a two-week high. The rally was driven by buying ahead of a Chinese holiday and optimism about potential stimulus measures after Chinese President Xi Jinping signaled new policies to support economic growth.
Focus Shifts to Federal Reserve’s Meeting
Following the European Central Bank’s (ECB) decision to lower its deposit rate to 3.5% on Thursday, investors are now shifting their focus to the U.S. Federal Reserve’s long-awaited monetary easing cycle. Money markets currently see a 43% probability of a 50 basis-point (bps) rate reduction on September 18.
“I think there’s a strong case for 50,” stated Bill Dudley, the former president of the New York Fed, reflecting the growing expectation for a larger cut.
Stock Movers
Among individual stocks, AstraZeneca was the biggest laggard, dropping 1.1% after Deutsche Bank downgraded its rating to “sell” and lowered its price target. On the other hand, Denmark’s DSV climbed 2.4% after the transportation and logistics firm announced its plan to invest approximately €1 billion in Germany over the next three to five years following its acquisition of Deutsche Bahn’s logistics unit Schenker.
As markets head into next week, all eyes will be on the Federal Reserve’s decision, which could shape global economic conditions for the remainder of the year.
