European Stocks Decline as Weakness in US and Asia Affects Markets

European stock markets experienced a decline on Tuesday, influenced by weakness on Wall Street from the previous day as investors reevaluated the trajectory of US interest rates amidst ongoing conflict in the Middle East and regional economic challenges.

At 03:05 ET (07:05 GMT), Germany’s DAX index was down by 0.7%, while France’s CAC 40 fell 1.2%, and the UK’s FTSE 100 decreased by 0.9%.

### Weak Lead from Wall Street

European indices reflected a weak lead from Wall Street, following last week’s robust US jobs report, which led traders to dismiss the likelihood of another significant rate cut by the Federal Reserve at its upcoming meeting in November.

Moreover, investors expressed disappointment as Chinese markets reopened after a week-long holiday, where initial sharp gains were quickly diminished due to a lack of substantial stimulus measures from Beijing’s policymakers, which had been anticipated.

Prior to the Golden Week holiday, the Chinese government had announced various stimulus efforts, including interest rate cuts, and investors were hoping for further actions earlier on Tuesday.

### German Industrial Production Rises

In Europe, the economic calendar was fairly light for the day, though data showed that German industrial production rose by 2.9% month-over-month in August, surpassing the expected gain of 0.8%. However, this figure was still down 2.5% year-over-year and followed Monday’s data revealing a 5.8% monthly slump in German factory orders and a mere 0.2% increase in eurozone retail sales for August.

The European Central Bank’s meeting next week is anticipated to result in further policy easing, having already cut rates twice this year, as inflationary pressures have reduced. Bundesbank President Joachim Nagel indicated on Monday that he is open to considering an additional ECB interest rate cut, as German economic growth is expected to be weaker in the latter half of the year.

### Crude Slips After Strong Gains

Oil prices fell on Tuesday as traders took profits following a significant rally driven by concerns that escalating Middle Eastern tensions might disrupt supplies from the region.

As of 03:05 ET, the Brent contract slipped by 1.5% to $79.72 per barrel, and U.S. crude futures (WTI) traded 1.5% lower at $75.95 per barrel. Both contracts had risen over 3% on Monday, reaching their highest levels since late August, contributing to an 8% rally from the previous week, marking the largest weekly gain in over a year.

In addition to Middle Eastern concerns, the latest US crude oil inventory data is expected later in the session, with analysts forecasting an increase of 1.9 million barrels.