Solid Gold Berjangka – European stock markets traded within a narrow range on Thursday (October 29) ahead of the European Central Bank’s (ECB) interest rate decision. The STOXX 600 index remained flat, while Germany’s DAX rose 0.2%, France’s CAC 40 gained 0.6%, and the UK’s FTSE 100 added 0.3%.
The market widely expects the ECB to keep its deposit facility rate at 2.50%, following previous hikes in June and September aimed at addressing energy price pressures. Nevertheless, investors are focused on ECB President Christine Lagarde’s press conference, looking for clues regarding a potential rate hike in December.
Expectations for further tightening remain high, as oil prices hold above US$100 per barrel and regional natural gas prices stay near their highest levels since 2022. The market currently assigns an approximately 80% probability to a 25-basis-point rate hike in December, though high government borrowing costs and stringent bank lending standards could diminish the need for further tightening.
Investors are also awaiting U.S. Personal Consumption Expenditures (PCE) data for September, following the Federal Reserve’s decision to maintain interest rates in the 3.75%–4.00% range without providing clear guidance on its next move. Core PCE is expected to rise 0.3% month-on-month—an increase from the 0.2% growth seen in August—with the data likely to influence expectations for Fed policy and impact global market volatility.
On the corporate front, shares of Shell rose 2.6% after the company reported net profit that beat expectations and announced an expansion of its share buyback program. Conversely, Volkswagen fell 1.6% after its operating profit for the first nine months dropped sharply, while shares of ASML, ASM International, BE Semiconductor, and STMicroelectronics weakened amid concerns regarding high capital expenditure on AI technology and the outlook for global hardware demand. (srh)