Market Analysis

Focusing on the US central bank policy announcement, European markets rise

Amos Simanungkalit · 13 Sep33K Views

European stocks gained on Friday, positioning for weekly increases, driven by a rally in mining shares, as attention turned to the upcoming U.S. Federal Reserve meeting, where a widely anticipated monetary easing cycle is set to begin.

By 0710 GMT, the pan-European STOXX 600 index rose 0.5% to 514.5 points, with France's CAC 40 gaining 0.3%. The rise followed a report that showed consumer prices in France, the eurozone's second-largest economy, had increased by 2.2% year-on-year in August, in line with earlier estimates.

Mining stocks provided a boost to the broader market, rising 0.6%, as copper prices reached a two-week high due to pre-holiday buying in China and optimism over potential economic stimulus measures after President Xi Jinping pushed for growth-supporting policies. [MET/L]

Following the European Central Bank's (ECB) decision to cut its deposit rate to 3.5% on Thursday, market participants now turn to the U.S. Federal Reserve. Investors are speculating on the size of the potential rate cut, with money markets showing a 43% chance of a 50-basis-point reduction on September 18.

"I believe there's a strong argument for a 50-basis-point cut," said Bill Dudley, former president of the Federal Reserve Bank of New York.

AstraZeneca (LON) led the declines, falling 1.1% after Deutsche Bank downgraded the stock to "sell" and reduced its price target.

Meanwhile, Denmark's DSV surged 2.4% after the transport and logistics firm announced a plan to invest approximately one billion euros ($1.1 billion) in Germany over the next three to five years following its acquisition of Deutsche Bahn's logistics unit, Schenker.