Casper Hedberg | Bloomberg | Getty Images
LONDON — European stocks were cautiously higher Tuesday, with market uncertainty lingering over the outlook for interest rate cuts.
The pan-European Stoxx 600 index was up 0.15% in early deals, with sectors and major bourses trading in mixed territory. Tech stocks added 1.28%, while oil and gas fell 1.2%.
Shares of Danish biotech company Zealand Pharma rose 4%, recovering losses from the previous session after CEO Adam Steensberg told Reuters last week that the company was looking for a big pharma partner to help bring its weight loss drug to market.
In central bank news, Sweden’s Riksbank cut interest rates by 25 basis points to 3.50% from 3.75%, and signaled two to three more rate cuts this year.
Jens Magnusson, chief economist at financial services group SEB, said the central bank was likely to look to the Federal Reserve for direction on the pace of policy easing.
“They don’t want the rate spread to become too big,” he told CNBC. “If the Fed continues on a more hawkish drive, then the Riksbank can’t move on at full speed.”
Global markets will now be focused on key Fed events this week. Minutes from the central bank’s most recent meeting will be released Wednesday, before Fed Chair Jerome Powell’s Jackson Hole, Wyoming, speech on Friday.
Both events could give investors more clarity on the outlook for interest rate cuts and what to expect at the Fed’s next meeting. Fed futures funds pricing indicates a roughly 76% likelihood of central bank policymakers lowering rates by 25 basis points in September, per the CME FedWatch Tool.
Asia-Pacific markets were mostly up on Tuesday, tracking the Wall Street rally Monday, while investors also assessed minutes of the Reserve Bank of Australia’s latest meeting. U.S. stock futures were flat last night after the S&P 500 and the Nasdaq Composite notched their longest winning streaks of 2024.
Data releases in Europe Tuesday include Germany’s producer price index and the EU’s final year-on-year inflation rate.