European Stocks Decline Following UK Growth Revision; Attention on Mixed Asian Markets

European stock markets experienced a decline on Monday, marking the final day of September, as investors analyzed various local economic reports alongside the mixed performance of major Asian indices.

As of 03:05 ET (07:05 GMT), Germany’s DAX index was down 0.3%, France’s CAC 40 fell by 0.5%, and the UK’s FTSE 100 dropped 0.12%.

### Mixed Asian Influences

The lackluster start to the week follows the closing of the pan-European Stoxx 600 index at a new record high on Friday, largely driven by China’s recent announcement of several stimulus measures aimed at revitalizing its economy, which is a key export market for many European companies.

Chinese stock indices showed strong performance on Monday, with Hong Kong’s Hang Seng index soaring over 4%. This surge came after China’s central bank announced it would instruct banks to lower mortgage rates for existing home loans before October 31, as part of a range of aggressive measures to support the struggling property market.

Conversely, Japan’s Nikkei index tumbled nearly 5%, as investors began to factor in the risk of increased interest rates under the new Prime Minister Shigeru Ishiba, a known critic of the Bank of Japan’s lenient monetary policies. Additionally, Japan’s industrial production fell by 3.3% month-on-month in August, with housing starts down 5.1% compared to the previous year.

### UK Growth Revised Downward

In Europe, recent data indicated that the British economy grew by 0.5% in the second quarter, slightly below the initial estimate of 0.6% for gross domestic product growth. Year-on-year comparisons showed a growth rate of 0.7%, which was below economists’ predictions of a 0.9% increase.

Expectations are set for German inflation data to be released later in the session, with indications that prices in the eurozone’s largest economy are rising below the European Central Bank’s medium-term target of 2%. The ECB lowered interest rates earlier this month, and speculation is increasing that a further easing of monetary policy could occur in October amid slowing growth and cooling inflation.

### Stellantis Revises Annual Guidance

Within the corporate sector, Stellantis saw its stock fall more than 6% after the French-Italian carmaker reduced its annual projections, citing a decline in global industry dynamics and heightened competition from China in the electric vehicle sector.

Meanwhile, British luxury automaker Aston Martin warned of lower annual core profits and stated it no longer expects to achieve positive free cash flow in the first half of the year, attributing this to supply chain disruptions and weakened demand in China.

### Oil Prices Rise Amid Middle East Tensions

Oil prices increased on Monday due to concerns over escalating conflicts in the Middle East, particularly after Israel intensified its military operations against Iranian-backed Hezbollah and Houthi militant groups.

By 03:05 ET, Brent crude climbed 1.2% to $72.44 per barrel, while U.S. crude futures rose 1.1% to $68.94 per barrel. Israel confirmed its bombing of Houthi targets in Yemen on Sunday, following recent military actions against Hezbollah in Lebanon. Both oil contracts saw declines last week amid growing worries over demand, as the fiscal stimulus from China failed to restore market confidence.