Europe: Energy shares lead Stoxx 600 to snap 5-day gains
EUROPE’S main stock index snapped a five-day winning streak on Tuesday, dragged down by heavyweight energy stocks, with investors sizing up domestic economic data and bracing for this week’s meeting of central bankers in Jackson Hole.
The pan-European Stoxx 600 index closed 0.5 per cent lower, erasing early gains and easing from the near three-week high level hit earlier in the day. All the regional bourses also slipped into negative territory.
An early drop in oil prices knocked the energy sector down 2 per cent to an over one-week low, even though the commodity’s prices picked up gradually during the day.
A Reuters poll showed European shares will rise modestly by year-end, thanks to central bank interest rate cuts, although strategists were nevertheless cautious on their outlook for the region’s biggest companies.
Both the Stoxx 600 and blue-chip Stoxx50E are up over 7 per cent so far this year, having survived a recent bout of volatility that saw the benchmark index slip below the crucial 500-point mark at the month’s start on concerns over a potential US recession.
“Goldilocks thematic and expectations that (the) Fed is closer to pivot is fuelling the risk-on sentiment,” OCBC strategists noted.
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“Potentially, mild unwinding of risk-on positions is not ruled out as we progress on the week.”
Investors are now on the lookout for minutes from the Federal Reserve’s July policy meeting on Wednesday and comments by the most influential central bank’s Chair Jerome Powell at the Jackson Hole conference in Wyoming on Friday.
Any concrete hints on US rate cuts will provide a fresh boost to risk assets globally amid lingering fears over the world’s largest economy’s performance, although such concerns seem to have eased off of late.
Among major single movers, SalMar dropped 7.4 per cent after the Norwegian salmon farmer posted operating profit below estimate and cut its Iceland harvest outlook.
BT fell 6.4 per cent as its existing partner TV company Sky is set to launch its broadband services on internet provider CityFibre’s network, in a blow to the telecom giant.
Danish medical equipment maker Coloplast lost 5 per cent after reporting third-quarter earnings.
Luxury and automobile stocks were among the rare bright spots.
In Sweden, the central bank lowered its key rate as expected, and said it could speed up policy easing if price pressures do not pick up, holding out the possibility of up to three more cuts before year end.
Swedish shares, however, fell 0.5 per cent, snapping a five-day gaining streak.
On the data front, German producer prices decreased by 0.8 per cent on the year in July, in line with expectations. REUTERS
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