European stocks news: European stocks rise on hopes of Fed pause, Prosus slips on China woes

European stocks rose on Monday on hopes that the Federal Reserve could ease its pace of interest rate hikes as investors braced for a busy week of earnings and the European Central Bank’s decision on key interest rates.

The Continental STOXX 600 Index rose 0.4%, with the utilities, media and travel & leisure sectors leading the gains.

Major Wall Street indexes rallied on Friday after a report said the Fed will likely debate a lower interest rate hike in December.

“While it is encouraging that Fed officials have started to point to the end of rate hikes, any such pause will remain conditional on lower inflation and a cooling labor market. ‘hasn’t been seen in the data yet,’ said Mark Haefele Chief Investment Officer at UBS Global Wealth Management.

“We believe the full effects of tight monetary policy on the economy and corporate earnings are not yet well reflected in consensus forecasts, which could lead to disappointments ahead.”

Keeping gains in check, Dutch tech investor Prosus fell 12.5%, tracking weakness in Hong Kong tech giants, after Chinese President Xi Jinping’s recently unveiled management team heightened fears that economic growth is sacrificed for the benefit of ideological policies. nL1N31O0L4]

Other China-exposed sectors, such as oil & gas and mining, fell 0.8% and 1.1%, respectively, while luxury stocks including Hermes and LVMH lost around 1% each.

Asia-focused insurer Prudential Plc fell 6.5%, while banks HSBC and Standard Chartered fell around 2%.

The UK’s top-notch FTSE 100 underperformed as the pound rose after news broke that Boris Johnson had pulled out of the contest to become Britain’s next prime minister, likely paving the way for Rishi Sunak to become the leader.

Meanwhile, euro zone business activity contracted at the fastest pace in nearly two years in October, an S&P Global survey showed, as the cost of living crisis kept consumers cautious and undermined demand.

This week’s focus will be on the European Central Bank’s policy meeting where it is expected to hike interest rates another 75 basis points as it attempts to contain inflation to five times its target, according to a Reuters poll.

Among individual shares, Philips fell 3.8% after the Dutch medical equipment maker said it planned to cut around 4,000 jobs and warned that supply chain issues would continue to weigh on companies. sales in the last months of 2022.

Credit Suisse Group gained 1.1% after settling a tax evasion and money laundering case in France with a payment of 238 million euros ($234 million) to the state. (Reporting by Sruthi Shankar in Bengaluru; Editing by Shailesh Kuber)