European Shares and Dollar Dynamics Ahead of Central Bank Meetings

European shares experienced fluctuations while the dollar maintained its strength on Tuesday, as market participants awaited a series of central bank meetings this week. These meetings are expected to result in a rate cut by the U.S. Federal Reserve and a continuation of current policies by the Bank of Japan.

The pan-continental STOXX 600 index dropped 0.5%, reaching a two-week low. Key European indices such as Germany's DAX, France's CAC 40, and Britain's FTSE 100 also saw declines ranging from 0.1% to 0.7%.

Lars Skovgaard, a senior investment strategist at Danske Bank, noted the lack of positive economic indicators in Europe, stating, "There's not that much to hang your hat on in Europe."

Meanwhile, U.S. equity markets have outperformed their European counterparts this year, with the Nasdaq setting new records. The S&P 500 has surged 27% in 2024, compared to the STOXX 600's modest 7% increase.

In Asia, Japan's Nikkei 225 and South Korea's Kospi also faced declines, with the latter experiencing yearly losses exceeding 7%, making it the worst-performing market in Asia this year.

The focus remains on central banks, with the Fed expected to cut rates and other banks likely to maintain current policies. Cryptocurrencies like Bitcoin continue to trade near record highs, buoyed by expectations of a more favorable regulatory environment under the incoming U.S. administration.