European stocks started the week in a cautious mood amid an ominous economic outlook that has heightening expectations for peak interest rates.
In London, the FTSE 100 (^FTSE) opened on the back foot, down 0.3% as a big week for company results kicks off. The CAC (^FCHI) fell 0.3% in Paris and the DAX (^GDAXI) slipped 0.4% in Frankfurt.
“Investors start the week with some trepidation, ahead of the latest Federal Reserve decision and a barrage of corporate earnings on both sides of the pond,” said Richard Hunter, head of markets at Interactive Investor.
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“The mood remains contemplative with the FTSE 100 having slipped in early exchanges, following a weaker lead from Asian markets.”
It comes as the final two contenders to become Britain’s next prime minister, former chancellor Rishi Sunak and foreign secretary Liz Truss, will go head to head in a televised debate later on Monday.
Across the Atlantic, Wall Street indices snapped a three-day winning streak, closing lower on Friday after weak corporate earnings reports spooked investors.
The tech-heavy Nasdaq (^IXIC) led the pack, slumping 1.9%, while the benchmark S&P 500 (^GSPC) lost 0.9%, and the Dow Jones (^DJI) declined 0.4%.
All eyes will be on the Federal Reserve’s rate decision and the second quarter gross domestic product data due later this week.
Michael Hewson, chief market analyst at CMC Markets, said: “This late Friday weakness appears to have sharpened concerns that it might be a forewarning of similar disappointments as we look towards the likes of Google owner Alphabet (GOOGL), and Facebook owner Meta Platforms (META) who report their numbers later this week, starting with Alphabet tomorrow.
“There is also the not insignificant matter of the latest US central bank rate decision which is expected to see the Federal Reserve raise interest rates by another 75bps on Wednesday, following on from the 75bps in June.”
Asian stocks were in the red overnight with the Nikkei (^N225) down 0.8% in Tokyo. In Hong Kong, the Hang Seng (^HSI) dipped 0.4%, while the Shanghai Composite (000001.SS) declined 0.6%.
