Stoxx 600 Marginally Lower

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Stoxx 600 Marginally Lower

Stoxx 600 Marginally Lower As Tech Sector Drags

Europe's leading stock index, STOXX 600, is trading a little lower on Monday amid the heavy losses in the tech sector. However, the index is only marginally lower as the investors keep their focus on the Federal Reserve decision this week.

As of now, STOXX 600 is down by 0.2% for the day and has already ended its 3-day winning streak. The tech index of Europe is down by 1.2%, which is one of the biggest percentage drops for the day. It is also important to note that the same tech sector gained 5% last week.

European Retail Sector Up By 0.9%

Meanwhile, the retail sector is up by 0.9%, with H&M leading the charge with a 3.1% appreciation in its stock price. But the bigger picture is that everyone is now focused on Wednesday's meeting of the US Federal Reserve.

Right now, the odds of a rate cut by Federal Reserve is around 61%. Most of the economists believe that Fed will deliver a 50 bps or 0.50% rate cut. Similarly, the total easing in 2024 will be around 120 bps which equals to 1.20%.

With the Fed officially starting its rate-cutting cycle, a similar move will take place across the globe. This will lead to a global easing cycle and will be beneficial for the equities.

If we look at Europe, the ECB has already introduced 2 rate cuts in the last 3 months. That's proof enough that the era of high rates is now officially over, and inflation is no longer a concern.

If we look at the recent past, easing cycles always lead to a bullish phase in global equities. At least, that's what will happen in the short to medium term.

Besides the US Federal Reserve, investors are also looking forward to the rate decisions in the UK and Norway. Both of these banks will also decide their official rate this week.

According to ECB Philip, the interest rate cuts will be gradual, but other policymakers have different views given the economic uncertainty.

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