European Stocks Rise on Rate Outlook and China Risks
European stocks rose on Tuesday as traders weighed the outlook for interest rates and the potential risks posed by China. The Stoxx Europe 600 Index gained 0.3%, while the U.K.’s FTSE 100 Index rose 0.4%.
Rates Outlook
The European Central Bank is expected to keep its benchmark rate unchanged at its meeting on Thursday. The ECB has kept its main refinancing rate at a record low of 0.00% since March 2016.
The ECB is also expected to maintain its asset purchase program at its current level of €1.35 trillion. The ECB has been buying bonds since March 2015 in an effort to stimulate the economy.
China Risks
Traders are also keeping an eye on the potential risks posed by China. The Chinese government has been cracking down on foreign companies operating in the country, and has imposed tariffs on some U.S. imports.
The U.S. and China have been locked in a trade war since 2018, and the two countries have yet to reach a deal. The trade war has weighed on global economic growth and has been a drag on European stocks.
Sectors
The Stoxx Europe 600 Index was led higher by the technology and consumer discretionary sectors. The technology sector rose 0.7%, while the consumer discretionary sector gained 0.6%.
The banking sector was the biggest laggard, falling 0.3%. Banks have been under pressure in recent weeks as investors worry about the potential impact of negative interest rates.
U.K. Stocks
In the U.K., the FTSE 100 Index rose 0.4%. The index was led higher by the energy and materials sectors, which rose 1.2% and 0.9%, respectively.
The banking sector was the biggest laggard, falling 0.7%. Banks have been under pressure in recent weeks as investors worry about the potential impact of negative interest rates.
European Currencies
The euro was little changed against the U.S. dollar, trading at 1.17. The pound was also little changed, trading at 1.30 against the dollar.
Outlook
European stocks are likely to remain volatile in the near term as traders weigh the outlook for interest rates and the potential risks posed by China. Investors will also be keeping an eye on the U.S. presidential election in November.
The ECB is expected to keep its benchmark rate unchanged at its meeting on Thursday. The ECB has kept its main refinancing rate at a record low of 0.00% since March 2016.
The ECB is also expected to maintain its asset purchase program at its current level of €1.35 trillion. The ECB has been buying bonds since March 2015 in an effort to stimulate the economy.
Traders are also keeping an eye on the potential risks posed by China. The Chinese government has been cracking down on foreign companies operating in the country, and has imposed tariffs on some U.S. imports.
The U.S. and China have been locked in a trade war since 2018, and the two countries have yet to reach a deal. The trade war has weighed on global economic growth and has been a drag on European stocks.
In the near term, investors will be watching for any signs of progress in the U.S.-China trade talks and any developments in the U.S. presidential election. They will also be keeping an eye on the ECB’s rate decision on Thursday.
Overall, European stocks are likely to remain volatile in the near term as traders weigh the outlook for interest rates and the potential risks posed by China.