European shares rose in trading on Friday ahead of speeches by US Federal Reserve (Fed) Chairman Jerome Powell and European Central Bank (ECB) President Christine Lagarde. Both will speak after markets in Western Europe close.
Investors expect from them signals about the further direction of monetary policy. Given recent data on weakening economies in the US and Europe, traders are hopeful that both central banks are close to ending their rate hike cycles, Trading Economics notes.
As the media received the text of a pre-prepared speech that Powell will deliver to participants in the annual meeting of central bankers from around the world, the trend of some exchanges changed, but in the end the stock markets closed flat in the “green” zone in Friday.
The focus of the Fed chairman’s speech was inflation, which Powell described as too high and said US central bankers were “ready to continue raising interest rates”, which was not met with unanimous approval from investors, according to CNBC. Therefore, at the beginning the markets were divided almost equally – there are as many losers as there are winners.
“Inflation has come down from its peak, which is a positive development, but it remains too high,” Powell stressed. In conclusion, he said that the US central bank intends to “keep policy at a restrictive level until we are confident that inflation is moving steadily down towards our target (2%)”. This is not news to investors, according to Reuters, which is probably why the markets closed in one direction, in profit, with the exception of the general Stoxx Europe 600 index, which fell very slightly.
European market participants were also assessing the region’s macroeconomic statistics.
Thus, Germany’s GDP in the second quarter did not change compared to the previous three months, according to a report by the German Federal Statistics Agency (Destatis), which presented the final data. The final estimate was in line with both the preliminary and consensus expert forecasts provided by Trading Economics.
Meanwhile, the index of business confidence in the German economy fell in August for the fourth month in a row and updated the low since last October. The value of the indicator, calculated by the Munich Institute for Economic Research Ifo, this month fell to 85.7 points compared to a revised 87.4 points in July. The average forecast of analysts accepted 86.7 points.
In Britain, the consumer confidence index rose unexpectedly in August as inflationary pressures eased in the country. The value of the indicator is minus 25 points against minus 30 points in July, according to a report by GfK NOP Ltd. Experts polled by The Wall Street Journal on average expected the indicator to remain at minus 30 points.
Additionally, Statistics Sweden (SCB) reported a drop in the country’s unemployment rate in July to its lowest level since December 2019 at 6.2%, down from 6.4% in July 2022. The overall forecast provided by Trading Economics was 7.8%.
By noon, the overall index of the largest European companies Stoxx Europe 600 rose by 0.3%, and of the national “blue chip” gauges, the highest rise was Italy’s FTSE MIB (+0.75%), followed by France’s CAC 40 (+ 0.48%), the Spanish IBEX 35 (+0.38%), the British FTSE 100 (+0.37%) and the German DAX (+0.26%). After intermediate changes on some exchanges in the late afternoon, all equity markets closed higher except for the general Stoxx Europe 600.
From the table above, it is clear that only the general European index Stoxx Europe 600 closed with a minimal decline, and the Italian FTSE MIB finished with the highest growth.
Shares of Sweden’s Ericsson gained 0.43% after the news of the conclusion of a long-term agreement with China’s Huawei for mutual licensing of patents related to the 5G standard. The document covers sales of network infrastructure solutions and consumer devices and provides the parties with access to each other’s proprietary, standardized technologies worldwide.
At auctions in France, the market value of luxury goods manufacturers Hermes (+1.26%) and LVMH (+0.73%) increased significantly. In Italy, on the Milan Stock Exchange, the growth leaders are the banks UniCredit (+1.37%), Banca Mediolanum (+1.03%) and Banca Generali (+0.89%).
After the price of oil, the quotations of the shares of the major oil producers also rose, including the British BP plc (+0.71%), the French TotalEnergies (+0.26%), the British-Dutch Shell (+0.72%).
Notably, the capitalization of Watches of Switzerland Group PLC, which sells Swiss watches, plunged 22.1% following reports by Forbes and other media that Rolex was buying another watch retailer, Bucherer, for an undisclosed sum. As of July 30, Watches of Switzerland had 202 showrooms in the UK, continental Europe and the US, including 87 mono-brand boutiques in partnership with various luxury watchmakers, including Rolex, MarketWatch noted. Bucherer operates over 100 stores worldwide, 53 of which sell Rolex watches.
The securities of the British trading platform CMC Markets depreciated by 8.36%. The company lowered its full-year net operating income guidance.
2023-08-25 17:06:46
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