European equity market fluctuates after weekly peak

European shares saw volatility on Monday after their strongest weekly performance in three months. The pan-European STOXX 600 index fluctuated between -0.1 per cent and 0.1 per cent during the morning session, ending up 0.1 per cent at 512.05 points.

Defence stocks suffered declines, with companies such as Rheinmetall, BAE Systems, Saab AB, Thales, Leonardo, and Dassault Aviation falling between 1.6 per cent and 6 per cent.

This drop followed reports that Berlin plans to limit military aid to Ukraine due to budget constraints. The industrial goods and services sector, which includes most defence companies, declined by 0.2 per cent.

Conversely, the basic resources sector gained 1.3 per cent, buoyed by a 1.1 per cent rise in copper prices amid reduced recession fears in the US. The STOXX 600 index has regained losses from a recent sell-off, returning to the 511 level last seen on August 1.

Analysts are closely watching the upcoming economic data releases, including flash Purchasing Managers’ Index (PMI) figures from France, Germany, Britain, and the Eurozone, along with USPMI numbers and initial jobless claims.

The primary focus this week will be the global central bank gathering at Jackson Hole, Wyoming, where Federal Reserve Chair Jerome Powell is expected to speak on Friday and provide insights into future monetary policy.

Daniela Hathorn, senior market analyst at Capital.com, noted, “Jackson Hole can be very important and is definitely going to set up momentum for traders. Anything that gives traders insight on monetary policy will impact US assets and spill over to European equities.”

Markets are fully pricing in a quarter-point rate cut by the Fed at its next meeting, according to LSEG’s Fedwatch tool.

Additionally, Nexans saw a 3.3 per cent drop after Goldman Sachs downgraded its rating on the French power cable supplier’s stock from “Buy” to “Neutral.”

Attribution: Reuters

Subediting: M. S. Salama