European stocks rise ahead of key US economic data

European stocks advanced as investors awaited crucial U.S. economic data that could influence the Federal Reserve's decision on Wednesday regarding interest rate cuts.

Retailers led the advance in Europe’s Stoxx 600, while Nasdaq 100 contracts climbed, signaling a partial rebound after Monday’s rotation out of tech megacaps on Wall Street. The dollar steadied following a four-day decline and Treasury yields edged lower, News.Az reports, citing foreign media.

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On the eve of the Fed’s first rate cut in more than four years, investor attention will home in on US retail figures due later. Opinion in markets is divided between expectations that the Fed will cut by 25 basis points, or by 50.

“August’s US retail sales report is, arguably, the most important of today’s releases, given that a soft print would likely see participants go ‘all-in’ on the idea of a jumbo 50 basis point Fed cut tomorrow,” wrote Michael Brown, a strategist at Pepperstone Group Ltd., in a note. “Though it’s tough to imagine an equally aggressive paring of dovish bets were the data to beat expectations.”

In Asia, Japan’s Nikkei 225 fell, weighing on the regional equity index, while concern continued about weakness in China’s economy. Disappointing data over the weekend may add pressure on the authorities to ramp up fiscal and monetary stimulus if the nation is to reach this year’s growth target.

Trading in China, Taiwan and South Korea was shut for public holidays.

The yen was steady after strengthening beyond 140 per dollar for the first time since July 2023 on Monday, as investors look ahead to the Bank of Japan’s rates decision at the end of the week.

The currency has been steadily appreciating due to bets that the interest rate differential between the US and Japan will narrow further, leading to a decline in export-heavy Japanese equities.

In commodities, gold remained near record levels, with traders betting bullion will benefit from a weaker dollar and lower Treasury yields following the Fed decision. Oil edged higher.

News.Az