European stocks and bonds faced a decline on Monday as expectations for rate cuts by the European Central Bank (ECB) were dampened by officials, despite weak economic data from Germany. This contraction marked the first decline in Germany’s economy since the pandemic began and led to a drop in the Stoxx Europe 600 index.
Governing Council member Robert Holzmann and other ECB officials warned against initiating discussions to trim borrowing costs due to heightened inflation and geopolitical risks. Traders have been anticipating six quarter-point rate cuts by the ECB, starting in April, while economists expect four cuts to begin in June.
Surprisingly, weak economic news is no longer proving to be beneficial for equity markets, according to Benoit Péloille, the chief investment officer at Natixis Wealth Management.
Meanwhile, US equity-index futures remained stagnant as stock and Treasury cash markets were closed for a public holiday.
Individual stock moves were seen in companies such as Dassault Aviation, Delivery Hero, and Just Eat Takeaway.com, as they experienced declines.
Oil prices faced a decline despite a Houthi attack on a US-owned commercial vessel. In addition, European natural gas futures tumbled.
On a brighter note, the MSCI Asia Pacific share index saw a rise, particularly in Taiwan after the Democratic Progressive Party emerged victorious in the presidential election.
China’s CSI 300 Index experienced fluctuations amid speculation regarding a lower required reserve ratio.
Looking ahead, inflation readings in Germany and the UK, as well as political events like the World Economic Forum and US earnings reports, will be closely monitored this week. These developments will likely have a significant impact on the global markets.
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