Europe midday: Stocks inch lower ahead of inflation data

(Sharecast News) - European stocks retreated from a two-month high on Monday, with investors choosing to take profits ahead of key inflation data later in the week. Also weighing on sentiment was government data in China which revealed that industrial profits continued to decline in November, albeit at its slowest pace in nearly a year. Profits at industrial enterprises in the country decreased by 7.8% from January to October compared to last year.

The pan-European Stoxx 600 was down 0.14% by 1249 CET, with Madrid's Ibex 35 the only major index across the continent in positive territory. The Stoxx 600 finished Friday's session at 459.98, its highest close since 20 September.

"The upcoming inflation updates from the US and Europe are set to be prominent features on the macroeconomic agenda for the week ahead," said Stephen Innes, managing partner at SPI Asset Management. "These figures could reinforce market speculation regarding a potential shift in monetary policy in 2024 aimed at preventing inadvertent tightening through the real policy rate channel."

Figures on Thursday are expected to show the annual rate of US PCE inflation slowing to 3.1% in October from 3.4% in September, with the core rate falling to 3.5% from 3.7% - which would be the slowest rate since April 2021. Meanwhile, eurozone annual CPI inflation is also forecast to ease to 2.8% from 2.9%, with the core gauge declining to 3.9% from 4.2%.

Energy stocks across Europe were mostly weaker ahead of this week's OPEC meeting, with Brent crude down 1.1% at $79.61 a barrel, continuing its descent after trading above the $90 level just a month ago.

"Declines across both crude and natural gas prices do help allay fears of a potential inflationary surge, instead helping drive expectations of further downside for global CPI levels," said analyst Joshua Mahony from Scope Markets. "With European and US gas storage levels well above the historical norm, the recent cracks seen in OPEC production agreements have helped drive down prices as markets start to question the strength of demand in the fourth quarter."

Energy heavyweights BP, Shell, Repsol and TotalEnergies were firmly in the red.

London-listed property portal Rightmove surged after lifting its guidancce for average spend per advertiser after stronger-than-expected trading. Numis upgraded its rating for Rightmove from 'add' to 'buy', highlighting an attractive entry point after the stock's recent falls.

In contrast, Goldman Sachs downgraded its stance on gambling company Entain, to 'sell' from 'buy', and slashed the price target to 820p from 1,450p, causing shares to drop.