Oct 9 2024: European stock markets showed little movement on Wednesday as investor sentiment was dampened by the ongoing conflict in the Middle East and market volatility in China. At 03:05 ET (07:05 GMT), Germany’s DAX index traded nearly flat, while France’s CAC 40 dipped 0.1%, and the U.K.’s FTSE 100 rose 0.4%.
European Markets Impacted by Global Factors The main European indices slipped following losses in Asian markets, particularly in China, where the absence of more concrete stimulus measures from Beijing after the Golden Week holiday disappointed investors. China, a key export market for many European companies, has been struggling with sluggish consumer spending and a real estate crisis, despite recent stimulus efforts, including interest rate cuts.
In the Middle East, conflict between Hezbollah militants and Israeli forces escalated, contributing to the cautious tone in European markets. Hezbollah targeted Israeli soldiers near the Lebanese border, following weeks of intensified conflict and Israeli ground operations in southern Lebanon.
German Exports Defy Expectations On a brighter note, German exports grew in August, defying forecasts of a decline. Exports rose by 1.3% from the previous month, driven by strong demand from the U.S. This came in contrast to expectations of a 1.0% decrease.
Looking ahead, the European Central Bank (ECB) is set to meet next week. Policymakers are expected to ease monetary policy further, following two rate cuts this year as economic growth has slowed and inflation pressures have eased. ECB policymaker François Villeroy de Galhau indicated that more cuts are likely, with the timing depending on progress in the fight against inflation.
Rio Tinto Expands into Lithium In corporate news, Rio Tinto confirmed it would acquire Arcadium Lithium in a $6.7 billion all-cash deal, positioning Rio as the world’s third-largest lithium producer. This move grants Rio access to lithium mines and processing facilities worldwide, serving major clients such as Tesla, BMW, and General Motors.
Elsewhere, Volvo Cars announced that deputy CEO Bjorn Annwall would depart as part of a company reorganization.
Crude Oil Prices Rebound Oil prices recovered some of Tuesday’s steep losses. By 03:05 ET, Brent crude rose 0.5% to $77.55 per barrel, and U.S. crude futures (WTI) increased 0.3% to $73.81 per barrel. Tuesday’s losses followed disappointment over the lack of new stimulus measures from China, the world’s largest oil importer, and reports of a potential ceasefire between Hezbollah and Israel.
However, gains were limited by a larger-than-expected increase in U.S. oil inventories. The American Petroleum Institute reported a 10.9 million barrel rise in inventories last week, far exceeding expectations of a 1.95 million barrel increase. Official data from the U.S. Energy Information Administration, due later Wednesday, could further affect market sentiment amid concerns of cooling fuel demand as the U.S. deals with severe hurricanes.