European equities moved lower on Monday as investors prepared for a week of major central bank decisions, while higher oil prices, delayed Middle East diplomatic talks and warnings over advanced artificial intelligence development weighed on markets.
The pan-European STOXX 600 fell 0.3%, remaining close to its lowest level in nearly two months. Germany’s DAX declined 0.5%, France’s CAC 40 lost nearly 1%, Italy’s FTSE MIB dropped 1.3% and Spain’s IBEX 35 fell 1.6%.
London’s FTSE 100 moved in the opposite direction, gaining 0.72%.
Technology Stocks Fall Following AI Development Warnings
European semiconductor and technology shares declined after the leaders of OpenAI and Anthropic called for a temporary slowdown in the development of advanced AI models.
BE Semiconductor (EU:BESI) fell 5.2%, while ASML (EU:ASML) declined 4.4%. STMicroelectronics (BIT:STMMI) lost 3.4%, Soitec (EU:SOI) fell 13.7% and Infineon (TG:IFX) declined 8%.
The moves came as investors assessed the potential implications of the AI development debate for technology and semiconductor companies.
Brent Rises as Hormuz Talks Are Postponed
Brent crude futures rose about 3% to trade near $112 a barrel, extending gains that have taken oil prices nearly 40% higher since early July.
The move followed further attacks on Saudi Arabian infrastructure, including a major oil pipeline, while Houthi activity near Red Sea shipping routes added to concerns about wartime supply disruptions.
A diplomatic meeting in Oman between Iran and Gulf Arab states concerning the reopening of the Strait of Hormuz to maritime traffic was also postponed.
Markets Price 86% Probability of Fed Rate Increase
Investors are also preparing for several monetary policy decisions during the week.
Following last week’s European Central Bank interest rate increase to 2.50%, money markets were pricing an 86% probability that the US Federal Reserve would raise its benchmark rate by 25 basis points at its September 15-16 meeting. Swaps markets were also indicating expectations of another quarter-point increase in December.
ECB policymaker Peter Kazimir said on Monday that Eurozone inflation risks could move above existing forecasts as natural gas and electricity prices increase.
While not explicitly calling for another rate increase, Kazimir said that “keeping an open mind should not be mistaken for hesitation”, adding that the central bank would act decisively when supported by the evidence.
The Bank of Japan is widely expected to raise interest rates on September 18, while investors are also awaiting the Bank of England’s policy decision.
Elsewhere, Antofagasta (LSE:ANTO) fell 4% and Aurubis (TG:NDA) declined 3.2% amid lower metal prices.
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