European stocks mixed; PMIs, Commerzbank in spotlight

Investing.com – European stock markets traded in a mixed fashion Monday, starting the new week on a cautious note as investors continued to digest last week’s outsized interest rate cut by the Federal Reserve.

At 03:10 ET (07:10 GMT), the in Germany traded 0.1% higher and the in the U.K. gained 0.1%., while the in France fell 0.2%.

Raised optimism after Fed cut

The Fed’s decision to start its rate-cutting cycle with a reduction of a hefty 50 basis points last week has boosted stock investors’ optimism globally, as lower rates should boost economic activity in the world’s largest economy and biggest growth driver.

This buoyancy was increased Monday by the decision of the People’s Bank of China to cut its 14-day repo rate by 10 bps, loosening local monetary conditions to help boost economic growth. 

The move came just days after the PBOC disappointed markets by leaving its benchmark loan prime rate unchanged. 

Both the and the have climbed to all-time highs on Wall Street in the wake of the Fed move, and the European indices have further room to rise.

Flash PMIs due

A series of flash September PMIs for the eurozone countries, and the UK, will offer more clues as to the start of the economic activity in Europe.

The cut its key interest rates by 25 basis points earlier this month, after a similar move in June.

Further indications of economic difficulties in the euro region will raise bets on further policy easing in October, especially after the Fed’s dramatic move.

That said, the major economic data release this week will arrive across the pond, in the form of the Fed’s preferred inflation gauge, , on Friday. 

Analysts expect a 0.2% month-on-month rise taking the annual pace to 2.7%, while the headline index is seen slowing to just 2.3%.

Commerbank slips lower

Commerzbank (ETR:) stock traded lower after the German government said that it would retain its 12% stake in the bank for now in a move that will likely keep any merger with Italy’s UniCredit on hold.

Late on Friday, Germany’s Finance Agency said the state will not sell any more shares in Commerzbank for the time being and the bank’s strategy is “geared towards independence.”

Italy’s second-largest bank took a 9% stake in Commerzbank earlier this month, creating the possibility of cross-border banking consolidation.

Middle East tensions offer support

Crude prices rose Monday, buoyed by concerns that heightened conflict in the Middle East may curtail regional supply. 

By 03:10 ET, the contract climbed 0.3% to $73.92 per barrel, while futures (WTI) traded 0.4% higher at $71.25 per barrel.

Traders were seen attaching a risk premium to oil prices as Israel continued to carry out strikes in Gaza and Lebanon, keeping concerns of an all-out war in the oil-rich region in play. 

Hezbollah had recently vowed retaliation against Israel after the country allegedly detonated several electronic devices used by the Lebanese group. 

The constant fighting and threats of war pushed up concerns that a bigger conflict in the Middle East will disrupt supplies in the oil-rich region, tightening global markets. 

Crude prices have seen a two-week rebound from near three-year lows, as supply disruptions in the wake of Hurricane Francine also pointed to tighter markets.