European Shares Poised For Mixed Open

European stocks may open on a mixed note Monday as investors watch the latest geopolitical developments in the Middle East and await Fed Chair Jerome Powell’s speech later in the day for clues to additional rate cuts.

The Federal Reserve reduced its benchmark interest rate by 50 basis points on September 12, marking the first decrease since 2020.

Traders are now positioning themselves for the U.S. central bank to cut rates by another 75-100 bps this year.

Powell’s speech later in the day at the National Association for Business Economics event along with U.S. reports on manufacturing and service sector activity as well as the jobs report for September, due this week could impact investors’ views on the Federal Reserve’s next move at its monetary policy meeting on November 6-7.

Closer home revised quarterly national accounts and mortgage approval data from the U.K. and flash inflation figures from Germany may influence trading sentiment as the day progresses.

On the geopolitical front, Israel intensified its military operations against Hezbollah in Lebanon on Sunday, targeting numerous sites following the killing of the group’s leader, Sayyed Hassan Nasrallah.

It is feared that Israel’s increased attacks against Hezbollah in Lebanon and Houthi in Yemen may bring the region one step closer to a much wider conflict involving Iran and the United States.

Asian stocks traded mixed, with benchmark indexes in mainland China and Hong Kong surging 4-7 percent as three of China’s largest cities relaxed rules for homebuyers and China’s central bank revised the mortgage rate pricing mechanism to ease financial pressure on homeowners.

Investors shrugged off the results of an official factory survey that showed China’s manufacturing activity shrank for a fifth straight month in September.

Japan’s Nikkei index plunged nearly 5 percent even as a surging yen steadied on dovish comments from Japan’s upcoming Prime Minister Shigeru Ishiba.

Gold held steady in Asian trading but headed for a fourth consecutive quarterly gain.
Oil prices rose about 1 percent on increasing concerns of potential supply disruptions from the Middle East producing region.

U.S. stocks ended mixed on Friday as AI investor favorite Nvidia led a broad selloff for chipmakers, offsetting soft PCE inflation report and data showing strong sentiment among U.S. consumers.

Data showed the Fed’s preferred measure of inflation slowed to 2.2 percent in August from 2.5 percent in July, compared with economists’ expectations of 2.3 percent.

Core PCE remained sticky at 2.7 percent, raising concerns the Fed may not go for consecutive rate cuts.

The Dow edged up 0.3 percent to a new record closing high, while the tech-heavy Nasdaq Composite and the S&P 500 shed 0.4 percent and 0.1 percent, respectively.

European stocks advanced on Friday amid China’s efforts to stimulate its economy and the release of soft U.S., French and Spanish inflation data.

The pan-European STOXX 600 gained half a percent to close at a record high. The German DAX rallied 1.2 percent, France’s CAC 40 rose 0.6 percent and the U.K.’s FTSE 100 added 0.4 percent.