European Stocks Tick Higher on Easing Fed Hike Bets
European stocks edged higher on Monday, driven by gains in basic resources and technology sectors. The pan-European STOXX 600 index rose 0.1% to 658.51 points as of 0823 GMT. Basic resources stocks led the charge, with Antofagasta, Hochschild Mining, and Fresnillo up between 1.9% and 2.3%. Gold prices also advanced, increasing by 0.4%, after softer-than-expected US economic data and a weaker dollar.
Technology stocks added to the gains, rising by 1%. Goldman Sachs raised its 12-month target for the STOXX 600 last Friday, forecasting the benchmark to reach 695 points from 660 previously, implying around 5.5% upside from current levels. This move was based on resilient economic growth and strong corporate earnings.
Investors are now shifting their focus back to macroeconomic and geopolitical developments in search of a market catalyst. Andrea Cicione, head of research at TS Lombard, noted that 'there's a divergence between Europe and the US, with US data softening while European data remains relatively strong.' This could support European markets as the earnings season is largely over.
The focus is increasingly shifting to central bank decisions in September. Friday's soft US retail sales data reinforced expectations that the Federal Reserve will keep interest rates on hold next month, while money markets are pricing in around an 84% chance of a 25-basis-point European Central Bank rate hike in September.