European Stocks Close Notably Lower As Investors Await Central Bank Policy Meetings

(RTTNews) - European stocks closed notably lower on Monday as investors stayed wary of indulging any significant buying ahead of monetary policy decisions of the Federal Reserve, the Bank of England (BoE), and the Bank of Japan (BoJ).

The BoE is all set to end its tightening cycle with a final rate hike this week as any further increase will push the UK economy into a deep recession.

The record high wage growth as well as persistently high inflation strengthened the call for additional policy tightening. However, the past rate hikes have started to damp the economic activity. Recent economic indicators suggest that the economy has entered a mild recession.

Markets widely anticipate a quarter-point increase on September 21, a day after the release of the consumer price inflation data.

The Fed is widely expected to leave interest rates unchanged, but traders will pay close attention to the accompanying statement and the central bank's projections for clues about the outlook for rates.

While CME Group's FedWatch Tool is currently indicating a 99% chance the Fed will leave rates unchanged this week, the outlook for the November meeting is somewhat more mixed. The FedWatch Tool is indicating a 68.4% chance rates will remain unchanged in November but a 31.3% chance of another quarter point rate hike.

The German economy is set to contract slightly in the third quarter as private consumption is unlikely to contribute positively, Bundesbank said in its monthly report released Monday.

The pan European Stoxx 600 dropped 1.13%. The U.K.'s FTSE 100 drifted down 0.76%, Germany's DAX declined 1.05% and France's CAC 40 ended 1.39% down, while Switzerland's SMI closed lower by 0.96%.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Netherlands, Poland, Portugal, Russia, Spain, Sweden and Turkiye closed with sharp to moderate losses.

Iceland and Norway edged down marginally, while Ireland closed slightly higher.

In the UK market, Persimmon and British Land Company both ended lower by about 4.6%. Entain, St. James's Place, ICP, TUI, Land Securities and Auto Trader Group ended lower by 3 to 4%.

Rightmove, CRH, Pennon, Berkeley Holdings, Segro, Carnival, Barratt Developments, Prudential, Just Eat Takeaway.com, Easyjet, Antofagasta, Natwest, AstraZeneca and IAG declined 1.7 to 3%.

Mondi rallied 3.25%. Royal Mail and Hikma Pharmaceuticals gained about 2% and 1.8%, respectively. Reckitt Benckiser and BT also ended notably higher.

In the German market, MTU Aero Engines, Sartorius, Infineon, Porsche, Merck, Adidas, HeidelbergCement, Siemens Energy, Zalando, Vonovia, Volkswagen, BASF, Deutsche Bank, Siemens Healthineers and Bayer ended lower by 1.3 to 3.6%.

In Paris, Societe Generale plunged more than 12% after its Chief Executive Slawomir Krupa cut profitability targets and forecast slower growth, unveiling what he called a "realistic" new plan. The bank said it would target a return on tangible equity of between 9 and 10% by 2026, as against a previous target of a 10% return by 2025.

Teleperformance ended 3.3% down. WorldLine, LVMH, ArcelorMittal, Capgemini, Credit Agricole, Air Liquide, BNP Paribas, Kering, Publicis Groupe and STMicroElectronics lost 2 to 2.6%.