(Bloomberg):European stocks fell on the 30th. The outlook for automakers Volkswagen (VW) and Stellantis was lowered. The STOXX Europe 600 Index fell 1%. Automotive-related stocks and travel and entertainment stocks were particularly sold.

The STOXX 600 fell further on a Bloomberg report that the German government has lowered its growth outlook for this year, expecting zero growth.

In the European bond market, German 10-year bonds made up for the temporary decline. The move came in response to European Central Bank (ECB) President Lagarde’s growing optimism that inflation can be brought under control and that she would reflect this in her policy decisions in October.

Money markets are pricing in the ECB’s October interest rate cut to be 22 basis points (bp, 1bp = 0.01%). Last weekend it was 20bp. This corresponds to an approximately 90% probability that the interest rate will be cut by 0.25 points next month.

British bonds fell. Traders are backing down on expectations for a Bank of England rate cut, assuming a rate cut of 36 basis points by year-end. It has fallen 3bp since last weekend.

European market overview on September 30th (table as of 6pm in London)

Original title: European Stocks Extend Losses as Carmakers Slump After Warnings

Bunds Erase Drop Amid Bets on ECB October Cut: End-of-Day Curves

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