European stocks climb ahead of key central bank meetings; Fed expected to cut

Investing.com - European stocks were mostly higher Monday, starting the new week on a positive note ahead of a number of key central bank policy-setting meetings, including from the U.S. Federal Reserve and the Bank of England. 

The DAX index in Germany closed 0.3% higher, while the CAC 40 in France gained 0.9%. The FTSE 100 in the U.K. was an outlier, declining 0.1%. 

Fed leads central bank parade 

Investors are bracing for a crucial Federal Reserve meeting this week, with recent economic data showing a weakening labor market and tame inflation.

This has spurred hopes that the Fed will cut interest rates when it concludes its meeting on Wednesday, and this optimism has resulted in the main Wall Street indices climbing to record levels during last week - in fact the tech-heavy Nasdaq Composite closed Friday at a fresh record high.

However, the Federal Reserve is not the only central bank set to make monetary policy decisions this week.

The Bank of England cut interest rates last month for the fifth time in just over a year, but is widely expected to hold still on Thursday with inflation at 3.8% in July, the highest in the Group of Seven advanced economies and almost twice the U.K.’s central bank’s medium-term target.

There are also central bank meetings scheduled in the likes of Japan, Canada and South Africa, among others.

Chinese growth slows 

There is little economic data of significance in Europe on Monday, but sentiment was hit by data showing China’s factory output and retail sales reported their weakest growth since last year in August.

Industrial output grew 5.2% year-on-year, the lowest reading since August 2024 and weaker than a 5.7% rise in July. 

Retail sales, a gauge of consumption, expanded 3.4% in August, the slowest pace since November 2024, and cooling from a 3.7% rise in the previous month. 

Rheinmetall expands into naval construction

In the corporate sector, German defence group Rheinmetall (ETR:RHMG) announced it has struck a deal with the Luerssen Group to buy its military shipbuilding arm, Naval Vessels Luerssen, expanding into naval construction.

The companies did not disclose the price of the transaction, which is expected to close early next year pending antitrust clearance.

AO World (LON:AO) lifted its profit outlook and announced its first-ever share buyback on Monday, with the online electricals retailer reporting double-digit revenue growth in the first half of the year.

Crude rises on Russia supply disruption

Oil prices rose on Monday, extending recent gains on the back of potential disruptions in Russian supply following Ukrainian drone attacks on Moscow’s energy infrastructure. 

At 12:01 ET, Brent futures climbed 0.4% to $67.26 a barrel, and U.S. West Texas Intermediate crude futures rose 0.7% to $63.11 a barrel.

Both contracts gained more than 1% last week as Ukraine stepped up attacks on Russian oil infrastructure, including the largest oil exporting terminal Primorsk and the Kirishinefteorgsintez refinery, one of the two largest refineries in Russia.

The strikes have the potential to take large amounts of Russian oil production offline, and could herald potential supply disruptions, especially for Moscow’s top markets India and China.