European shares rebound as focus turns to ECB cuts

The main regional index slumped 3.5% last week, its biggest decline since the US regional banking crisis in March 2023, as subdued economic data globally dented sentiment

Mon, 09 Sep, 2024 - 20:33

European stocks rebounded from their biggest weekly drop in 18 months as traders’ attention turned to key US inflation data and the European Central Bank’s (ECB) rates decision this week.

The Stoxx Europe 600 Index gained 0.8% by the close.

Travel and leisure and chemical stocks gained the most, while real estate underperformed. French luxury conglomerate Kering slumped to a seven-year low on worries about demand in China.

The main regional index slumped 3.5% last week, its biggest decline since the US regional banking crisis in March 2023, as subdued economic data globally dented sentiment.

With the Federal Reserve set to cut rates this month, US inflation data to be released on Tuesday will be closely watched.

The ECB is expected to reduce interest rates on Thursday, following up on June’s move.

“We think investors are looking for signs of growth,” said Susana Cruz, a strategist at Panmure Liberum.

“In the eurozone, the manufacturing sector remains weak, with no clear signs of acceleration or a sustainable source of demand emerging yet.

"In the US, the economy is experiencing a higher level of uncertainty and the narrative can flip quickly from soft landing to recession.”