European equity markets moved higher on Monday after falling to three-month lows last week, as weaker-than-expected US employment data reduced expectations for another Federal Reserve interest-rate increase.
The pan-European STOXX 600 gained 0.4% in early trading following three consecutive weeks of declines.
Germany’s DAX rose 0.2%, while France’s CAC 40 was broadly unchanged. London’s FTSE 100 gained 0.7% and Italy’s FTSE MIB advanced 0.8%.
European markets followed gains across Asia-Pacific equities as investors reassessed the outlook for US interest rates following Friday’s nonfarm payrolls report.
US employment growth came in below expectations, while figures for the previous two months were revised lower.
According to CME’s FedWatch tool, markets were pricing an approximately 20% probability of a Federal Reserve rate increase at its October meeting, down from around 65% a week earlier.
US Treasury yields also declined from recent highs, providing support to equity sectors that are more sensitive to changes in interest rates.
Middle East Developments Keep Energy Markets in Focus
Yemen’s internationally recognised, Saudi-backed government announced on Sunday the launch of a military campaign aimed at retaking territory controlled by Iran-backed Houthi forces.
Houthi forces subsequently claimed responsibility for ballistic missile and drone attacks targeting Saudi Aramco energy facilities south of Riyadh.
The developments maintained market attention on potential risks to regional energy infrastructure and oil supplies, with Brent crude prices continuing to reflect concerns surrounding the conflict.
Eurozone PMIs and ECB Officials Awaited
Investors are awaiting preliminary September Eurozone Composite PMI figures for further indications of business activity across the region amid higher energy prices.
Attention will also turn to scheduled remarks from European Central Bank Executive Board member Isabel Schnabel and Chief Economist Philip Lane.
Markets will be monitoring their comments for indications of the ECB’s assessment of inflation, economic growth and the outlook for monetary policy.
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