(Bloomberg) -- European equities edged lower as investors monitored European Central Bank’s rate cuts path as well as geopolitical developments in the US and the Middle East.
The Stoxx Europe 600 Index was down 0.4% at 09:26 a.m. in Paris, with exporters like carmakers falling in early trading on continuing trade war concerns. French blue chips index CAC 40 lost 1% as stocks underperformed following the country’s political standoff over budget, driving banking groups BNP Paribas SA, Societe Generale SA and Credit Agricole SA lower.
Concerns around French budget prompted the risk premium for the country’s government bonds to rise to the levels not seen since the euro crisis, with Prime Minister Michel Barnier warning the country faces “storm” in financial markets if his government’s budget is rejected. European stocks continue to be weighed down by trade tariff risks from the US, with President-elect Trump making Jamieson Greer the US Trade Representative and naming Kevin Hassett to lead the National Economic Council.
“It feels like we’re in a wait-and-see moment, we’re digesting the news flow latest cabinet appointments and trying to see what all of this means for a possible tariff war,” said Stephane Ekolo, a strategist at TFS Derivatives in London.
Traders continue to watch the path of interest rate cuts in Europe, with executive Board member Isabel Schnabel saying earlier today that the European Central Bank needs to be wary of cutting interest rates too far as borrowing cost are already near a level that no longer restrains the economy and going lower could backfire.
Among individual stocks, EasyJet Plc rose as the airline proposed to more than double its dividend payout for this year amid by robust demand for its holiday package offerings.
Meanwhile, the news about cease-fire between Israel and Hezbollah lifted some geopolitical risks that were weighing down on the region.
READ: Lebanon Cease-Fire Starts After Israel and Hezbollah Reach Deal
For more on equity markets:
- Europe Needs Catalyst to Shake Off Tariff Risk: Taking Stock
- M&A Watch Europe: Teleperformance, BBVA, Air France-KLM, EQT
- Spain Looks to Big Private Equity Deals to Spur IPOs: ECM Watch
- US Stock Futures Unchanged; Ambarella, Urban Outfitters Gain
- Labour’s Job Creation Battle: The London Rush
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