European markets opened with a slight decline today, after nearing record highs in the previous session amid optimism over potential easing of U.S. monetary policy. The STOXX 600 index dropped by 0.3%, while both the German DAX and French CAC 40 indexes fell by 0.5% and 0.4%, respectively. This decline comes as investors await remarks from Federal Reserve Chairman Jerome Powell regarding the possibility of a near term interest rate cut, raising some concerns in the market.
Economically, the week begins with a quiet trading session with no major economic data, while investors are looking forward to inflation figures from France, Germany, and Italy, which are expected to be released next Friday. Attention will also be on Nvidia’s earnings report, which is anticipated to be the key event this week, as it will provide crucial insights into the performance of the tech sector amid the current economic environment.
In company news, shares of JDE Peet’s surged by 17.2% after Keurig Dr Pepper announced its acquisition of the Dutch company in a deal worth 15.7 billion euros ($18.4 billion). This rise pushed the stock to its highest level since September 2022, boosting market optimism toward large acquisition deals.
With low interest rates, institutional investors are shifting toward U.S. Treasuries and away from the U.S. dollar, according to Bank of America. This shift reflects increased demand for U.S. Treasuries, particularly 10-year bonds, following Powell’s comments on the potential for future rate cuts. With the U.S. dollar weakening for the third consecutive week, Bank of America expects trend following investors to expand their positions in other major currencies such as the euro, pound, and yen. The bank also anticipates selling pressure on German Bunds and Chinese government bonds next week, indicating a shift toward higher-yielding U.S. Treasuries.
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