European mixed despite Fed rate cut optimism; U.K. budget looms

Investing.com - European stocks traded in a mixed fashion on Monday, starting the new week positively before giving up some of the gains later in the session despite renewed optimism that the U.S. Federal Reserve can cut interest rates next month.

The DAX index in Germany climbed 0.7%, the CAC 40 in France fell 0.3% and the FTSE 100 in the U.K. was flat. 

Fed rate cut hopes boost sentiment  

European stock markets have followed the gains seen in Asia earlier Monday, boosted by comments from influential Federal Reserve policymaker John Williams who said at the end of last week that U.S. interest rates can fall "in the near term".

The Fed’s next meeting will take place on Dec. 9-10 and markets are currently pricing in a 69.3% chance of a quarter-percentage-point cut, according to the CME FedWatch tool.

This has helped global stock indices recover from the sharp selloff over the last couple of weeks as investors questioned the sky-high valuations of the heavily-weighted artificial intelligence-linked tech names.

U.K. budget looms large  

Back in Europe, the main focus is on the release of the German Ifo business climate indicator later in the session, which is expected to show a slight improvement in November.

Elsewhere, investors in the U.K. are gearing up for the Autumn Budget on Wednesday, with Finance Minister Rachel Reeves widely expected to have to raise taxation in order to balance the country’s budget.

Britain’s economy has been largely stuck in a rut of slow growth since the 2007-08 financial crisis, something Reeves and Prime Minister Keir Starmer vowed to end when the Labour Party returned to power after 14 years last year.

However, Reeves looks set to raise taxes by tens of billions of pounds for the second time since the election to stay on track to meet her borrowing targets, hoping to avoid a bond market selloff while also increasing welfare spending.

Retailers look to Black Friday 

There are very few major quarterly earnings due in Europe on Monday, and this week looks like being a quiet one globally with Japan on holiday today and the U.S. celebrating Thanksgiving on Thursday.

That said, the following day, now known as Black Friday, is widely seen as the start of the festive holiday shopping season, a vital period for retailers both in the U.S. and across Europe.

Chinese e-commerce giant Alibaba (NYSE:BABA) stock jumped after its revamped consumer AI app, Qwen, registered a very strong start in public beta, sparking fresh investor optimism about its push into the generative-AI market.

Crude looks to Ukraine peace plan

Oil prices were higher on Monday after recent sharp losses as traders focused on the potential for a positive solution to the Russia-Ukraine peace talks.

Brent futures climbed 0.6% to $62.31 a barrel, and U.S. West Texas Intermediate crude futures rose 1.2% to $58.48 a barrel.

Both contracts were down about 3% last week, hitting their lowest settlements since October 21, as market participants worried that a Russia-Ukraine peace deal could see Russia crude returning to the global market.

On Sunday, the U.S. and Ukraine said they made progress during their talks on a peace plan.