STOXX 600 dips ahead of key data, but eyes first monthly gain in three

6:00 am Friday, November 29th, 2024

By Joao Manuel Vicente Mauricio and Ankika Biswas

(Reuters) -Europe’s STOXX 600 slipped on the final day of a turbulent week, weighed down by automobile and bank stocks, with investors on the lookout for crucial euro zone inflation data to gauge the possibility of a larger interest rate cut in December.

The pan-European main stock index was down 0.1% at 0930 GMT on Friday, poised for its fifth weekly decline in six.

Trading volumes are expected to be low, with the U.S. equity market open for half a day following the Thanksgiving holiday on Thursday.

Still, weaker-than-expected euro zone inflation data could prompt expectations of a 50-basis-point rate cut by the European Central Bank next month, potentially lifting equities.

“We still expect inflation to drop below target next year and the ECB to cut interest rates by more than what investors anticipate. Trump’s proposed tariffs pose a small upside risk to this forecast,” said Giulia Bellicoso, markets economist, Capital Economics.

Even though the STOXX 600 was still on track for a modest monthly gain in three, it sharply lagged behind the U.S. S&P 500, as the possibility of Europe being a U.S. tariff target and France’s political uncertainty dampened investor sentiment towards the bloc, among other factors.

Auto stocks were the worst hit in November, knocked down by concerns that U.S. President-elect Donald Trump’s proposed tariffs on Mexico could be more damaging for European car makers than any direct tariffs on EU goods.

France’s CAC 40 has been one of the worst-performing bourses in the region so far this month due to the country’s political uncertainty.

Prime Minister Michel Barnier dropped plans to raise electricity taxes in his 2025 budget, bowing to far-right pressure. The budget woes had pushed France’s borrowing costs to match those of Greece for the first time on Thursday.

The basic resources sub-index was the top sectoral gainer, driven by a 3% rise in miner Anglo American following a Jefferies’ rating upgrade to “buy” from “hold”.

Shares of TI Fluid rose 2% after the British automotive components supplier agreed to a 1.04-billion-pound takeover by Canada’s ABC Technologies.

Insurer Direct Line rose 2%,adding to Thursday’s 41% gain, after a report said Aviva contacted investors in Direct Line, possibly paving the way for a hostile takeover.

FLSmidth climbed 3.2% after BofA Global Research upgraded the Danish engineering group’s stock to “buy” from “underperform”.

French inflation for November edged up from last month, as expected, while German retail sales fell more than anticipated in October.

(Reporting by Joao Manuel Mauricio in Gdansk and Ankika Biswas in Bengaluru; Editing by Janane Venkatraman and Sherry Jacob-Phillips)