Trading in European stocks was muted on Monday as investors weighed signs of trouble in the Chinese property market before turning their attention to Federal Reserve policy minutes later in the week.
The Stoxx 600 was little changed at 8:03 a.m. in London, tracking weakness in Chinese equities earlier in the day. The country’s economic recovery is being hampered by a worsening property slump, with data due Tuesday likely to show little sign of a rebound in growth.
The mining and energy sectors led declines in Europe, while food and beverages outperformed. Among individual movers, Koninklijke Philips NV gained as the Agnelli family’s Exor NV bought a minority stake in the Dutch medical technology company. Talanx AG also inched higher after raising profit guidance.
A rally in European stocks has moderated in August amid concerns around higher-for-longer interest rates. Poor seasonal support has also fed into the pullback in the past two weeks and market strategists have warned about a more challenging trajectory for gains into the year-end.
Systematic investors are near maximum long on equities, and short-covering has run its course, implying they’re more likely to turn sellers if volatility shoots up, Barclays Plc strategists said in a recent note. Focus later this week will be on minutes of Fed’s latest policy meeting, with investors looking for clues on whether the central bank is likely to keep rates elevated for longer.
“This week, market participants will adjust their mood depending on a number of data-points, including Chinese activity data, Fed minutes and UK inflation,” said Fabiana Fedeli, chief investment officer for equities and multi assets at M&G Plc.
Fedeli added that she expects another 25-basis point hike from the Fed as core inflation remains “stubbornly high,” while sticky price pressures in the UK suggests the Bank of England has a “more difficult path ahead than other central banks.”
SECTORS IN FOCUS:
- Auto stocks as Tesla rolled out a new round of price cuts in China, sending some Asian auto stocks tumbling on worries the move could restart a price war that had showed signs of abating.
For more on equity markets:
- Easy Gains Are Over as Summer Lull Grips Market: Taking Stock
- M&A Watch Europe: Philips, Synlab, GAM, TalkTalk, YouGov
- US Stock Futures Rise
- UK Pollster YouGov Eyes NY Listing: The London Rush
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--With assistance from Michael Msika.
