On Monday, European shares dipped as investors awaited further stimulus measures from China to boost demand. They also awaited and watched this week’s hearing from Federal Reserve Chair Jerome Powell for any indication on the U.S. central bank’s rate outlook.
The STOXX 600 index for all of Europe decreased by 1.0%, while the DAX index for Germany decreased by 1.0% after closing at a record high the previous session. As the U.S. markets were closed on Monday for a public holiday, trading was light.
There was a 15.7% decline in the stock price of Sartorius, a manufacturer of laboratory supplies. The sales and margin projections for 2023 were lowered on Friday. On the other hand, there was a 16.2% dip in Getinge’s stock, a manufacturer of medical equipment. The share price of the company fell after they announced they faced new quality and supply chain issues, which would negatively affect the Swedish group’s second quarter profit and also affect the company’s operations for the rest of 2023.
The state media reported that China’s cabinet convened on Friday to discuss steps to boost economic growth. The focus still remains on geopolitics after China and the United States agreed to moderate their heated competition so it doesn’t degenerate into violence but failed to create any substantial breakthrough.
It is expected from China that it can cut key lending benchmarks on Tuesday, marking the first such relaxation in 10 months. In an attempt by the officials to save China’s sluggish economic recovery.
Strategists at Jefferies wrote in a client note that “there has been a lack of a more euphoric reaction in China-related markets to the latest easing measures.” “Given such market action and the relatively disappointing data, the question is whether more aggressive stimulus is coming.”
Europe’s most valuable firm, the luxury giant LVMH, which was exposed by China, fell by 1.8%. In response to demand worries from the top metal consumer, the basic resources index dropped by 2.2%.
The STOXX Europe aerospace and defense index gained 0.4% after MTU Aero Engines raised its earnings forecast for 2023. With the massive plane deal from the Indian budget carrier IndiGo, with 500 narrow-body jets, Airbus shares edged up.
Investors await testimony from Fed Chair Powell on Wednesday and Thursday for additional indications on the monetary policy future for the largest economy in the world. The STOXX 600 recently experienced its best performance in more than two months. The rate hikes are expected in Norway, Britain, and Switzerland this week.
