Europe Markets: Europe Markets Quiet As Fed Meeting In Focus

European markets were unusually calm Monday as investors contemplated whether central banks would save them from the impacts of the continuing U.S.-China trade battle.

How did markets perform?

The Stoxx 600 SXXP, -0.09%  was flat at 378.9, after declining 0.4% Friday.

The U.K.’s FTSE 100 UKX, -0.15%  was also flat at 7,345.6. On Friday it moved down 0.3%.

The pound GBPUSD, +0.0159%  was likewise flat at $1.2592. It sank Friday by 0.6%.

In Germany, the DAX DAX, -0.02%  ticked up 0.1% to 12,107.7 It slid 0.6% Friday.

France’s CAC 40 PX1, +0.21%  reached 5,377.3, an increase of 0.2% after decreasing 0.1% Friday.

Italy’s FTSE MIB I945, +0.29%  rose 0.2% to 20,661.1. On Friday it nudged 0.1% lower.

What’s moving the markets?

U.S. Commerce Secretary Wilbur Ross played down the prospect of a China-U.S. trade deal emerging from the G-20 summit in Japan if U.S. President Donald Trump and Chinese President Xi Jinping ultimately do hold talks. Ross said the “most that might come” is new ground rules for the negotiations or possibly a schedule of future discussions.

Investors will be watching and positioning themselves ahead of a busy week for central bank meetings, as some fear trade tensions are nudging the global economy toward recession. Others, however, are skeptical that the U.S. Federal Reserve will cut its policy rate Wednesday, as unemployment is at record lows and inflation is running close to the Fed’s target.

“Investors need to be asking themselves what the Fed is seeing that they are not, especially as the last two-rate cutting cycles from the American central bank initially brought holders of U.S. equities absolutely no joy at all,” said Russ Mould, investment director for AJ Bell.

The Bank of England and the Bank of Japan are also set to hold meetings.

Which stocks are active?

Deutsche Bank AG DBK, +1.82%  shares rose after a report in the Financial Times that the beleaguered lender is moving to set up a ‘bad bank’ holding up to €50 billion worth of poorly performing assets such as certain derivatives. The bank is expected to restructure its trading operations, shrinking or closing them outside continental Europe. Shares moved up 2%.

Deutsche Lufthansa AG LHA, -11.14%  slashed its projections for 2019, citing overcapacity and stiff competition in the air travel market. Its shares plunged 11.4%, and affected sentiment among other companies in the sector. EasyJet PLC EZJ, -5.64%  sank 5.2% while Ryanair Holdings PLC RY4C, -6.54%  declined 4.2%.

Royal Mail PLC RMG, +2.78%  ticked upward by 2.4% after Bernstein analysts upgraded its shares to outperform and highlighted the strength of its European parcels business, GLS. Shares over the past 52 weeks have cratered 59.2%.

RECENT NEWS

What Advisers Misunderstand About Protection

Protection is rarely rejected outright. More often, it is misunderstood. Most advisers recognise th... Read more

Gyrostat Market Outlook: Looking Beyond The 30-day Volatility Headlines

This outlook examines how financial markets are pricing risk rather than attempting to forecast market... Read more

Gyrostat Capital Management: The Hidden Assumption In Most Portfolios - Stability

Markets do not usually fail portfolios. Assumptions do. Most portfolios are built with car... Read more

Gyrostat February Outlook: Stewardship As Risk Reprices

This monthly outlook examines how financial markets are pricing risk, rather than attempting to forecast ... Read more

Gyrostat Capital Management: Why Risk Management Is Not About Predicting Risk

Why Risk Management is Not About Predicting Risk Financial markets reward confidence, but they punish certai... Read more

Gyrostat January Outlook: Calm At Multiyear Extremes

This monthly Gyrostat Risk-Managed Market Outlook does not attempt to forecast market direction. Its p... Read more