European stock markets opened with mixed results


Lerato Khumalo

European stock markets started the week with mixed activity, with the Stoxx Europe 600 indicator index falling 0.10 percent to 515 points after the opening, while the DAX 40 index in Germany rose 0.10 percent to 18,203 points.

While the FTSE 100 index in England was at 8,231 points, 0.10 percent below the previous close, the MIB 30 index in Italy increased by 0.42 percent to 33,449 points, the IBEX 35 index in Spain gained 0.32 percent to 11,067 points, and the CAC in France gained 0.32 percent to 11,067 points. The 40 index is at 7,642 points with a 0.17 percent premium.

Euro/dollar parity is currently at 1.0705, with an increase of 1 percent.

While a mixed trend was observed in global markets due to the cautious verbal guidance of bank officials despite the increasing expectations that the US Federal Reserve (Fed) may cut interest rates twice this year, the intense data agenda in the US and Europe became the focus of investors this week.

Analysts said that the growth data to be released in the US this week could provide more clues about the roadmap the bank will follow, and that investors are also focused on the guidance that Fed officials will give throughout the week.

On the other hand, analysts stated that the data announced in Europe continued to give mixed signals and said that election uncertainties throughout the region continued to have an impact on the markets.

While interest rate decisions of regional central banks differed last week, the Bank of England (BoE) kept the policy rate constant at 5.25 percent, the highest level of the last 16 years, in line with market expectations.

While the Swiss National Bank (SNB) reduced the policy rate by 25 basis points for the second time to 1.25 percent, the policy rate maintained its leading position in the easing cycle among developed countries.

In the statement of the BoE, it was stated that 7 of the members voted to keep the policy rate constant at 5.25 percent, and 2 of them voted to reduce it by 25 basis points to 5 percent.

The bank’s policy text stated that the decision not to reduce the policy rate was “well balanced” for some members.

With these developments and expectations that more members will support the interest rate cut, the probability that the bank will cut interest rates for the first time in September is priced at 89 percent in the money markets, while the probability of the BoE cutting interest rates for the second time in December after a possible interest rate cut is priced at 88 percent.

Analysts reported that the Ifo business confidence index in Germany and the Dallas Fed manufacturing industry index data in the USA will be followed today.