European equities opened higher on Monday, with investors positioning ahead of a pivotal week marked by central bank meetings, trade data, and political events.
The UK’s FTSE gained 0.2% in early trade, while Germany’s DAX rose 0.4% and France’s CAC 40 advanced 0.3%.
The broader positive sentiment was tempered by a sharp drop in shares of Danish wind energy firm Orsted, which slid more than 5% after the company announced plans to raise 60 billion Danish kroner ($9.4 billion) through a rights issue.
The new shares will be priced at 66.60 kroner, a steep 67% discount to Friday’s closing price of 200 kroner.
Investors will be monitoring the release of EU trade data later in the day, though no major corporate earnings are expected in Europe to start the week.
In the UK, attention is split between politics and monetary policy. President Donald Trump is due to arrive in London on Tuesday evening with First Lady Melania Trump for a state visit.
The couple will meet King Charles and Queen Camilla at Windsor Castle on Wednesday, before Prime Minister Keir Starmer hosts talks at Downing Street on Thursday.
On the economic front, the UK will release its latest inflation report on Wednesday, a day before the Bank of England’s policy decision.
While no rate cut is expected, markets will scrutinise the central bank’s guidance closely, especially as the US Federal Reserve is set to meet on Wednesday, with investors anticipating a more dovish tilt.
The Fed meet later this week
The latest rally in risk assets has been fueled by mounting expectations of US interest rate cuts, momentum that picked up after the release of August non-farm payrolls data on September 5.
Markets are now pricing in a cumulative 0.75 percentage point reduction in rates by the end of 2025 and 1.5 percentage points by September 2026.
Still, the Federal Reserve has been reluctant to move aggressively while consumer inflation holds steady at around 3%, above its 2% target.
The recent surge gained traction after a softer-than-expected reading on producer prices.
The August US Producer Price Index declined 0.1% month-over-month, compared with forecasts for a 0.3% increase, marking the first drop in four months.
The data showed corporate profit margins in wholesale and retail trade contracted, particularly in machinery and vehicles, signalling that companies are absorbing some cost pressures rather than fully passing them on to consumers.
Economists interpreted this as evidence that inflationary pressures may be easing faster than expected.
On Thursday, the Consumer Price Index confirmed market expectations.
While inflation remained elevated, investors were reassured that the pace of price increases was not accelerating.
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