Europe open: Lacklustre start with all eyes on Fed

(Sharecast News) - European stocks opened lower on Monday as traders and investors turned their attention to the US Federal Reserve's monetary policy decision this week which is widely expected to result in a 25-basis point cut in interest rates.

The pan-regional Stoxx 600 index was down 0.07% at 578.4 with all regional bourses lower bar Britain's FTSE 100 which eked out a 0.06% gain.

"Anything other than a quarter point cut to Fed Funds Rates on Wednesday will come as a big surprise but cast your eyes forward 12 months and the waters become much muddier," said Hargreaves Lansdown analyst Derren Nathan.

"Markets see two further quarter point cuts as the most likely outcome but the probability of a doveish third cut, or just a hawkish single cut isn't that far behind. It's commentary for 2026 and beyond that's likely to be the key focus for markets."

"With US jobs under pressure, inflation still above target, and lending rates 1.5 percentage points below the peak, already it's a balancing act that's becoming ever trickier. One thing looks certain, the days of sub 1% rates borrowers became accustomed to post the Great Financial Crisis are over with theoretical 'neutral' rates more likely to be in the 3% region."

In equity news, defence stocks made gains as a US-authored "peace deal" to end the war in Ukraine appeared to be stalling. Rheinmetall, Renk, Hensoldt were all higher.

Reporting by Frank Prenesti for Sharecast.com