On Tuesday, key European stock indices declined. Market participants are waiting for the Bank of England and the US Federal Reserve System's decisions on monetary policy.
At the time of writing, the STOXX Europe 600 index of Europe's leading companies fell by 0.27% to 406.76 points.
Meanwhile, the French CAC 40 sank by 0.33%, the German DAX dropped by 0.23%, and the British FTSE 100 gained 0.9%.
Top gainers and losers
Stocks of German chemicals company Henkel AG rose by 0.1% on improved sales forecasts for 2022 due to promising results from its Adhesive Technologies business unit.
Shares of British home improvement retailer Kingfisher plunged by 5.8%. Earlier, the company's management reported a 30% decline in pre-tax profits in the first half of fiscal 2023 amid record high inflation in the country and rising commodity prices.
The market capitalization of UK-based mobile payments group Boku Inc. soared by 11%. Earlier, the company said it had signed a multi-year commercial agreement with US Amazon.com Inc.
The shares of German tour operator TUI AG fell by 2.1% on news about the company's high costs due to flight cancellations.
The stocks of British Petroleum and Shell rose by more than 1%.
Shares of Italian bank Unicredit advanced by 1.8%. CEO Andrea Orsel recently told the media that Unicredit was considering a number of acquisitions in Germany as part of a plan to become a fully-fledged European bank.
The market capitalization of Swiss biotech supplier Bachem Holding jumped by 9% on the news that two new contracts for peptide delivery had been signed.
Market sentiment
On Tuesday, investors awaited the US Federal Reserve's September meeting. Its results will be released tomorrow.
During that meeting, the regulator will be accurately assessing the final August inflation figure. Analysts are confident that the central bank will again raise the rate by 75 basis points amid a slight decline in the Consumer Price Index. Last week, US Federal Reserve Chairman Jerome Powell said the regulator was prepared to act decisively to fight soaring consumer prices in the country.
Currently, about 82% of market makers believe that the US Federal Reserve will raise the benchmark interest rate by 75 basis points. At the same time, 18% predict a likely 100 basis point rate hike. Consequently, the interest rate could be increased to 300-325 or 325-350 basis points respectively.
Notably, the US central bank already raised its key rate by 25 basis points in March 2022, by 50 and 75 basis points in May and June respectively.
This week, participants of the global stock markets will also actively follow the Bank of England meeting. Most analysts believe the British regulator will raise the rate by another 75 basis points to combat skyrocketing inflation.
In the next meeting, the Bank of England will have to adjust its next steps in monetary policy according to the measures of Liz Truss's new cabinet to limit energy prices.
Notably, the Bank of England representatives predicted during the August meeting that inflation in the country would peak at 13.3% by the end of 2022. Then the UK will plunge into recession and it will not end until early 2024.
Moreover, monetary policy meetings of the central banks of Switzerland, Norway, Sweden, Japan, Turkey, and China are scheduled for this week.
The day before, the news came that the People's Bank of China had lowered the repo rate and also increased monetary injections into its economy. Lately, the regulator has been trying to stimulate the growth of China's economy. It has been hit hard by lockdowns and restrictions caused by the coronavirus pandemic.
On Friday, fresh data on the EU and UK PMIs will be released.
Over the past two months, the eurozone PMI has been balancing below 50, which is the line between contraction and expansion. At the same time, the risk of recession in the EU economy has reached its all-time high since July 2020.
On Tuesday, the latest data on Germany became the key downward factor for European exchanges. According to the Federal Statistical Office of Germany Destatis, by the end of August the producer price index in the country soared by 45.8% in annual terms after rising by 37.2% in July. The final figure was a record high. Producer prices in Germany rose by 7.9% in monthly terms after growing by 5.3% in July. The monthly rise in the index was also a record high. Experts believe that the main reason for such a dramatic increase in the producer price index in August is soaring energy prices. Last month, they skyrocketed by 139% in annual terms.
Previous trading results
Last Monday, European stock indices closed mostly in the red zone. At the same time, the British stock market was closed due to the funeral of Queen Elizabeth II.
Consequently, the STOXX Europe 600 index of Europe's leading companies fell by 0.09% to 406.34 points. Shares of French IT-company Atos SE and German energy company Uniper SE were top gainers among the components of STOXX Europe 600. They surged by 5% and 4.5% respectively. Stocks of German platform for the purchase and sale of used cars Auto1 Group SE, Norwegian solar energy producer Scatec ASA, Swedish energy company Orron Energy AB and the Norwegian gas station network owner Aker BP were top losers. They plunged by 8.2%, 7.6%, 6.7%, and 5.9% respectively.
The French CAC 40 sank by 0.26%, having closed its fifth consecutive session with losses, while the German DAX gained 0.54%.
The shares of Volkswagen AG grew by 1.1%. The day before, the management of the company announced that it planned to raise up to 9.39 billion euros during the listing of shares of the luxury carmaker Porsche.
The market capitalization of French TV companies TF1 and M6 plummeted by 2.3% and 3.4% respectively, on the news that their merger would not take place due to the opposition of the anti-monopoly regulator.