© Reuters. The German share cost index DAX chart is visualized at the stock market in Frankfurt, Germany, November 21, 2023. REUTERS/Staff/File Photo
By Sruthi Shankar
(Reuters) – The excitement surrounding the November rally in European stocks hit a roadblock on Tuesday, as European Central Bank policymakers’ latest statements cast doubts on potential interest rate cuts next year. The pan-European index suffered a 0.5% drop, with major players like Novo Nordisk (NYSE:) and LVMH experiencing a more than 2% decline. Despite the setback, the index is still on track for its most impressive monthly performance since January, driven by hopes of easing monetary policies from central banks like the Federal Reserve and the ECB. However, Bundesbank chief Joachim Nagel cautioned on Tuesday that the ECB may need to raise interest rates again if the inflation outlook worsens, urging the bank not to rush into policy easing after a series of record rate hikes. ECB President Christine Lagarde echoed similar sentiments, stating that the bank’s struggle to contain inflation was far from over. The recent statements from central bank policymakers have sparked concerns that rate cuts may not be as imminent as previously anticipated, quelling investor optimism. Financial markets are eagerly awaiting a series of economic data releases this week, including euro zone inflation numbers and the U.S. Personal Consumption Expenditures index, in search of clues about future monetary policies. German consumer confidence improved slightly heading into the Christmas season, yet remains at historically low levels with no signs of a sustainable recovery in Europe’s largest economy. In other news, Belgian pharmaceutical company Argenx suffered a 14.5% plunge after an advanced study of its bleeding disorder treatment failed to meet primary and secondary endpoints. Julius Baer slipped 2.5% following a downgrade from Morgan Stanley, while French video game maker Ubisoft fell 8.7% after announcing a placement of convertible bonds into shares. To read more, click here.
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