By Shubham Batra and Shashwat Chauhan
(Reuters) – European shares closed slightly lower on Monday as losses in heavyweight technology stocks weighed on the index, while the focus remained on the U.S. Federal Reserve, which is widely expected to start its monetary easing cycle this week.
The pan-European STOXX 600 index ended trading today down 0.2%, snapping a three-day winning streak.
The European technology index fell 1.2%, the biggest percentage decline among the major Stoxx sectors, after rising about 5% last week.
The retail sector led the advance with a 0.9% rise, supported by a 3.1% increase in H&M (ST:).
All eyes will be on the US central bank’s interest rate decision on Wednesday, with money markets indicating a 61% chance of a 50 basis point rate cut and a total easing of 120 basis points in 2024.
“With the Fed poised to jump on the bandwagon, the global easing cycle should be a tailwind for equities after the European Central Bank opted to cut rates for the second time in three months,” wrote analysts at Glenmede, led by Jason Pride, head of investment strategy and research.
“The momentum behind global monetary easing cycles has historically been a bullish signal for equities in the near to medium term.”
Interest rate decisions from central banks in Norway and the United Kingdom will also be in the spotlight this week.
The European Central Bank’s chief economist Philip Lane said the bank should continue to cut interest rates gradually, but policymakers expressed different views on how to signal their intentions amid economic uncertainty.
Among individual stocks, France’s Rexel jumped 9.1% after the Paris-listed group rejected a $9.4 billion takeover offer from billionaire Brad Jacobs’ QXO.
French drugmaker Ipsen rose 3.7% after RBC upgraded it to “outperform” from “sector perform,” as it found medium-term support from liver disease drug Ekervo (BCP) after its US Food and Drug Administration approval in June.
On the other hand, Nestle shares weighed on the benchmark index, falling 1% after Morgan Stanley downgraded the stock to “underweight” and lowered its price target.
Shares in France’s Worldline fell 15.2%, extending losses on Friday when the payments group said its chief executive Gilles Grabinet would leave the company, issuing its third profit warning.
Phoenix Group shares fell 5.3% after the British insurer halted the sale of its Sun Life business due to market uncertainty.