European stocks slipped lower on Monday after economic data showed that Germany’s economy contracted for the first time since the pandemic. The Stoxx Europe 600 index fell 0.3%, reversing its upward trajectory following a 13% gain over the course of 2023. Consumer goods and carmakers largely led Germany’s economic slump, creating a challenging environment for corporate earnings ahead of this week’s World Economic Forum gathering in Davos, Switzerland.
According to a Bloomberg poll of economists, the European Central Bank (ECB) is expected to implement four interest rate cuts throughout the year. Still, ECB Chief Economist Philip Lane has suggested that analysts are overconfident. Lane stated in an interview published over the weekend that premature rate cuts would be “self-defeating.”
“Today’s data could encourage the ECB to speed up monetary easing but we’re now getting at the stage when bad economic news no longer translates into good news for equity markets,” Benoit Péloille, chief investment officer at Natixis Wealth Management, stated.