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European stocks experienced a rise on Monday, buoyed by positive trends in global markets and anticipation of upcoming inflation data from the US and UK. The Stoxx 600 index, a significant benchmark for European equities, saw a 0.7% increase, partly influenced by Wall Street's gains last Friday.
This uptick reflects a cautiously optimistic sentiment among investors, hinging on the belief that interest rates may have reached their peak. Health firms, particularly Novo Nordisk A/S, contributed significantly to this upward trajectory.
Novo Nordisk's shares surged almost 4% following a study endorsing Wegovy, its major weight-loss drug, for reducing heart attacks and deaths in obesity patients. This positive news has added a robust thrust to the health sector in the European stock market.
Global Markets and Economic Forecasts
The uplift in European stocks was mirrored earlier in Asian markets, led by Taiwan Semiconductor Manufacturing Co., which reported its first monthly sales increase since February. This indicates a potential recovery in the global chip market, a critical component of the tech industry.
However, futures for the S&P 500 and the Nasdaq 100 slightly retreated, shedding about 0.2% and tempering some of the tech-led gains from Friday. Investors are now keenly awaiting US consumer price data, which is expected to show a decrease in inflation to 3.3% year-on-year for October, down from 3.7% in the previous month.
Similar trends are anticipated in the UK, with inflation figures due on Wednesday also forecast to exhibit slowing price growth. These expectations have contributed to a dip in Treasury yields to about 4.65%, a decrease of around 30 basis points this month.
Opinions among economists vary regarding the Federal Reserve's future rate cuts. While Morgan Stanley anticipates significant rate reductions starting from June next year, Goldman Sachs predicts the first cut around the end of 2024.
Eric Robertsen, Global Head of Research at Standard Chartered Bank, expressed on Bloomberg Television that he believes "the Fed is done," indicating a reduced risk of long-term interest rates increasing further. Additionally, investors are closely monitoring developments in US-China relations, with a scheduled meeting between Joe Biden and Xi Jinping and Beijing's potential move to resume purchases of Boeing Co.’s aircraft. Such thawing ties could positively impact global markets.