European stocks edge lower; caution ahead of central bank meetings

European stock markets edged lower Monday, as investors braced for a week packed with central bank meetings, including from the U.S. Federal Reserve.

At 03:35 ET (07:35 GMT), the DAX index in Germany traded 0.3% lower, the CAC 40 in France dropped 0.5%, while the FTSE 100 in the U.K. traded largely unchanged.

ECB officials in spotlight

As the new week commences, it is observed to be proceeding with caution, relinquishing some of the last week's gains. These gains were initially procured swiftly due to a surge of relief among investors, stemming from indications that the European Central Bank is close to concluding its cycle of interest rate hikes.

The ECB lifted interest rates on Thursday to a record high of 4%, but the accompanying press release hinted that the hike was likely to be its last with the eurozone economy struggling.

ECB policy makers ECB's Luis de Guindos, Frank Elderson and Fabio Panetta are scheduled to speak Monday, and their comments will be studied for the extent of the dissent from the more hawkish members of the group over the indications of an end to the year-long rate-hiking cycle.

Federal Reserve leads central banks parade

This week sees a number of major central banks hold policy-setting meetings, including the Bank of England on Thursday and the Bank of Japan on Friday.

However, the highlight will be Wednesdays Federal Reserve gathering, at which the U.S. central bank is widely expected to announce a pause to its series of interest rate increases.

That said, with U.S. consumer inflation rising by 0.6% on a monthly basis last month, the largest gain since June 2022, driven by higher gasoline prices, the Fed is likely to retain its hawkish outlook and likely signal higher-for-longer rates.

Chipmakers face difficulties globally

Back in Europe, Nordic Semiconductor (OL:NOD) stock slumped nearly 15% after cutting its revenue guidance for the third quarter

However, its problems aren't unique judging by a Reuters report which said that Taiwan‘s Taiwan Semiconductor Manufacturing (NYSE:TSM), the world’s largest contract chipmaker, had asked its suppliers to delay deliveries amid concerns over slowing demand.

Societe Generale (EPA:SOGN) stock fell almost 6% after new CEO Slawomir Krupa pledged to cut costs to boost profits by 2026 amid stagnating sales, in his first strategic plan for France's third-biggest listed bank.

Crude extends rally ahead of central bank meetings

On Monday, oil prices saw an upward trend, continuing to surge due to the anticipation of a tighter market prior to a number of central bank policy-determining meetings this week. Following the supply reductions from Saudi Arabia and Russia, crude oil standards have experienced over a 30% increase in the last three months. This could potentially lead the market into a significant shortfall in the fourth quarter.

Traders will be watching decisions and commentary by central banks, including the U.S. Federal Reserve, this week on interest rate policies, and key economic data out of China.

By 03:35 ET, the U.S. crude futures traded 0.8% higher at $90.70 a barrel, while the Brent contract climbed 0.6% to $94.51.

Additionally, gold futures rose 0.1% to $1,948.95/oz, while EUR/USD traded 0.1% higher at 1.0665.