European Stocks Mostly Rise as Eurozone Inflation Takes Center Stage

European stock markets showed modest gains on Tuesday, starting the new quarter on a positive note as investors anticipated crucial inflation data for the region.

As of 03:05 ET (07:05 GMT), Germany’s DAX index rose by 0.4%, while the UK’s FTSE 100 increased by 0.1%. In contrast, France’s CAC 40 experienced a slight decline of 0.1%.

Focus on Eurozone Inflation

The start of the month and quarter has been generally positive for European stock markets, with investors looking forward to the release of inflation data later in the session. There is a widespread hope for interest rate cuts by the European Central Bank (ECB) as the year approaches its end.

Recent data revealed that German inflation saw a more significant decline than anticipated, falling to 1.8% in September, slightly lower than the 1.9% forecast, following an increase of 2.0% in August. Easing inflation trends were also noted in France, Italy, and Spain, suggesting potential downside risks to the eurozone’s growth forecast of 1.8% for September, which remains below the ECB’s target of 2.0%.

Markets are positioning for an October rate cut, especially after comments from ECB President Christine Lagarde, who stated that current trends would be considered at the next policy meeting on October 17.

Job Data Coming This Friday

Major indices in the U.S. closed with slight gains overnight after Federal Reserve Chairman Jerome Powell indicated that while the Fed would continue to cut interest rates, future decisions would be made on a meeting-by-meeting basis.

The upcoming jobs report, set to be released on Friday, is highly anticipated, with expectations of 144,000 new jobs added to the U.S. economy last month. Weaker-than-expected data could reignite recession fears, while stronger-than-expected growth could lead to concerns over the Fed’s rate cut strategy.

Corporate Highlights

In corporate news, Haleon saw a decline in its stock by 0.9% after Pfizer divested approximately $3.26 billion worth of shares in the consumer healthcare company. Additionally, shares of Greggs dropped by 1.2% as the British bakery maintained its outlook for the full year, despite a slowdown in underlying sales growth.

Oil Prices Steady Amid Middle East Tensions

Oil prices showed little change on Tuesday as concerns about lackluster demand growth balanced out worries that rising tensions in the Middle East could impact global supply.

By 03:05 ET, Brent crude was down by 0.2% to $71.57 per barrel, while U.S. crude futures (WTI) also fell by 0.2% to $68.05 per barrel.

Israel announced that its troops had begun limited raids against Hezbollah targets in Lebanon, raising fears of a potential escalation in the already tense Middle East, which could involve the U.S. and Iran.

Brent crude ended September down 9%, marking its third consecutive month of declines and the largest monthly drop since November 2022. In the third quarter, it fell by 17%, while WTI dropped 7% in September and decreased by 16% for the quarter.