Oct 8 2024: European stock markets experienced a downturn on Tuesday, following overnight declines on Wall Street as investors reconsidered the trajectory of U.S. interest rates and the ongoing conflict in the Middle East. Regional economic concerns also contributed to the negative sentiment.
As of 03:05 ET (07:05 GMT), Germany’s DAX index was down 0.7%, France’s CAC 40 dropped 1.2%, and the U.K.’s FTSE 100 fell by 0.9%.
Weak Lead from Wall Street
The European indices followed a sluggish performance from Wall Street, where last week’s strong U.S. jobs report caused traders to rule out the likelihood of a significant rate cut by the Federal Reserve in its November meeting.
Adding to the disappointment was the reopening of Chinese markets after a week-long holiday. Despite initial gains, stocks quickly retreated as investors were let down by the absence of additional stimulus measures from Beijing. Leading up to the holiday, the Chinese government had introduced several stimulus actions, including interest rate cuts, raising hopes for more economic support.
German Industrial Production Rises
In Europe, economic data for the day was limited, though Germany reported a 2.9% rise in industrial production for August, exceeding the anticipated 0.8% increase. However, this figure represented a 2.5% decline on an annual basis, following a sharp 5.8% drop in German factory orders in the same month and a mere 0.2% increase in eurozone retail sales.
As the European Central Bank (ECB) prepares for its meeting next week, further policy easing is expected, especially given that inflationary pressures have subsided. Bundesbank President Joachim Nagel expressed openness to another potential ECB interest rate cut, acknowledging weaker-than-anticipated German economic growth in the latter half of the year.
Oil Prices Decline After Rally
Oil prices edged lower on Tuesday, as traders took profits following a strong rally fueled by concerns over potential supply disruptions in the Middle East. By 03:05 ET, Brent crude had fallen 1.5% to $79.72 per barrel, while U.S. crude futures (WTI) were down 1.5% at $75.95 per barrel.
Both benchmarks had surged over 3% on Monday, reaching their highest levels since late August, following last week’s 8% rally—the largest weekly gain in more than a year. Later in the session, U.S. crude inventory data from the American Petroleum Institute is expected, with analysts forecasting a 1.9 million barrel increase in stockpiles.
