Mixed Performance in European Stock Markets
European stock markets displayed a mixed performance with the UK market leading. The DAX index in Germany and the CAC 40 in France traded slightly lower, down by 0.2%, while the FTSE 100 in the UK rose by 0.3%. Investor focus is on the European Central Bank (ECB) policy-setting meeting.
ECB Rate Decision in the Spotlight
The ECB is set to make a crucial decision regarding its key interest rate. They must choose between raising the rate to a record level or pausing their ongoing rate-hiking cycle due to the deteriorating eurozone economy. The central bank has raised rates at its last nine meetings, and another 25 basis point increase would push the key deposit rate to 4%, its highest level since the euro’s launch in 1999. While ECB President Christine Lagarde hinted at a pause earlier, there are reports suggesting the bank may raise its inflation forecast for the next year to over 3%, increasing the likelihood of a rate hike.
U.S. Inflation Data Impacts
The Federal Reserve is closely monitoring U.S. inflation data following the release of consumer inflation figures. While consumer prices in the U.S. increased significantly in August, the annual rise in underlying inflation was the smallest in nearly two years. Analysts believe the Fed will likely keep rates on hold in September but may include one final rate hike in their official forecasts.
Arm Holdings Begins Trading After Float
Arm Holdings, a British chip design company, will start trading in New York for the first time after being taken private by SoftBank in 2016. The company’s $51-a-share float was highly oversubscribed, resulting in a valuation of $54.5 billion, indicating a positive market reception.
Oil Prices Rise Amid Tight Supplies
Oil prices increased as global supplies remained tight, and confidence in demand outlook stayed strong despite rising U.S. crude stockpiles. The International Energy Agency and OPEC expect oil markets to tighten further this year. Saudi Arabia and Russia extended their oil output cuts to the end of 2023, leading to both oil benchmarks reaching 10-month highs.
By 03:25 ET, U.S. crude futures traded at $89.12 a barrel, up 0.7%, while the Brent contract rose 0.6% to $92.44. Gold futures fell 0.2% to $1,927.85 per ounce, and EUR/USD traded 0.1% higher at 1.0736.