Europe's Markets at the Start of the Week Influenced by Chinese Impulses

European stock markets start the new week cautiously as investors react to further fiscal policy measures from China and look ahead to the upcoming interest rate decision by the European Central Bank. While Germany's DAX index rose by 0.3%, the CAC 40 in France and the FTSE 100 in the UK saw declines of 0.2% each. Beijing's recent pledges for fiscal support, including higher debt intake and support for regional governments, caused a stir in Asian markets—despite the lack of details regarding the scale and timing of the measures. These uncertainties led to mixed results on the stock exchanges, with significant gains in China, while the Hang Seng Index in Hong Kong slipped into the red. Goldman Sachs raised its growth forecast for China's real GDP in 2024 to 4.9%, although it remains below the official forecast of 5%. China's economy, a major export market for Europe’s top companies, continues to struggle with weak consumer demand and a real estate crisis. The European Central Bank is set to meet on Thursday, and a further interest rate cut by 25 basis points is expected. Despite economic activity in the Eurozone surprisingly declining in September and inflation falling below the ECB's 2% target, this development signals the strained state of the Eurozone economy. President Lagarde is expected to point out the risks to economic growth while affirming confidence in a timely return of inflation to the target level. In the corporate sector, European luxury goods manufacturers are in focus, especially as the Chinese market remains of great importance. French luxury conglomerate LVMH will present its quarterly figures on Tuesday. Across the Atlantic, investors are keeping an eye on the US banking landscape after positive reports from JP Morgan Chase and Wells Fargo. This week, results from Bank of America, Goldman Sachs, and Morgan Stanley are expected. The oil market experienced a significant price drop at the start of the week, triggered by weak inflation data from China and disappointing details about planned stimuli. Both Brent and US crude futures fell by about 1.7%. An OPEC monthly report is awaited with anticipation and could provide additional information on the supply situation, while geopolitical uncertainties in the Middle East persist.