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European markets close slightly higher ahead of Jackson Hole

Elliot Smith
Reuters

LONDON — European markets closed slightly higher on Thursday as global investors awaited the start of the U.S. Federal Reserve's Jackson Hole economic symposium.

European markets


The pan-European Stoxx 600 index ended the day up 0.3%, following a mixed day's trade. Oil and gas stocks climbed 1.1% while retail stocks fell 2%.

The Fed's annual symposium kicks off on Thursday, with Chairman Jerome Powell due to deliver a speech Friday. Investors will be listening for information on the central bank's monetary tightening trajectory as it looks to rein in inflation, and whether interest rate cuts are in sight at the end of the current cycle.

Luke Bartholomew, senior economist at Abrdn, said Powell may use the speech to deliver a "mea culpa" on his prediction a year ago that inflation would be "transitory," and to demonstrate what the Fed has learned about price pressures over the past year.

"Powell is likely to stress that policy still has a long way to go before the Fed will feel comfortable it has decisively turned the corner on restoring price stability. This is important because the market has behaved recently as if the Fed has pivoted away from its hawkish stance," Bartholomew said in an email Wednesday.

"It is hard to believe the Fed leadership is comfortable with how financial conditions have become much more accommodative after the last month, and so Powell will use this speech as an opportunity to push back against this more dovish interpretation of Fed policy that has arisen recently."

U.S. stocks were higher in late-morning trade Thursday, after Wall Street snapped a three-day losing streak on Wednesday.

Investors stateside will also be closely watching Thursday's weekly jobless claims data and Friday's PCE (personal consumption expenditure) reading, one of the Fed's favored inflation measures.

Shares in Asia-Pacific mostly ticked higher on Thursday, while Hong Kong's morning session was canceled due to a typhoon warning.

On the data front in Europe, Germany's Ifo Institute business climate and expectations surveys and final second-quarter GDP figures from Europe's largest economy were published Thursday.

U.S. markets open mixed

U.S. markets opened mixed Thursday as investors awaited cues on the economy from Federal Reserve chairman Jerome Powell.

The S&P 500 and the Nasdaq both moved higher in opening trade, up 0.2% and 0.4%, respectively. Meanwhile, the Dow Jones Industrial Average moved lower by 0.1%.

Investors are awaiting the start of the Jackson Hole economic symposium, which begins Thursday with Powell set to speak the following morning. 

— Karen Gilchrist

Germany's Ifo business climate index falls in August

Germany's Ifo Institute's Business Climate Index fell in August to 88.5 points, down from 88.7 points in July.

"Companies were somewhat less satisfied with their current business, and the strong pessimism of their outlook for the coming months is virtually unchanged," said Ifo Institute President Clemens Fuest.

"Uncertainty among the companies remains high, and the German economy as a whole is expected to shrink in the third quarter."

The institute expects German GDP to contract by half a percentage point in the third quarter, with the prospect of a recession still on the cards.

- Elliot Smith

Harbour Energy up 11%, Elekta down 9%

Harbour Energy shares jumped more than 7% in early trade to lead the Stoxx 600 after the London-listed oil and gas company reported strong first-half earnings, including a surge in free cash flow, and upped its share buybacks to $300 million.

At the bottom of the European blue chip index, Swedish radiotherapy company Elekta dropped more than 9% after reporting a fall in quarterly profit.

- Elliot Smith

Novartis to spin off generics arm, list in Zurich

Novartis announced Thursday that it would spin off its generics arm Sandoz and list it on the Swiss stock exchange.

"For both the innovative medicines and Sandoz businesses, the spin-off would enable enhanced focus and the ability to pursue independent growth strategies," the Swiss pharmaceutical group said in a statement.

Subject to tax rulings, board and shareholder approvals and market conditions, Novartis said the transaction is expected to be completed in the second half of 2023.

Shares of Novartis rose 0.8% during early morning trade in London.

- Elliot Smith

German second-quarter GDP growth revised up to 1.7% year-on-year

The German economy grew unexpectedly in the second quarter, new figures confirmed on Thursday, despite fears of stagnation amid soaring inflation and threats to energy supply following Russia's invasion of Ukraine.

German second-quarter GDP growth was revised to 0.1% quarter-on-quarter, up from an initial estimate of 0.0%, the country's federal statistics office confirmed on Thursday.

On an annual basis, the economy grew 1.7% from the same period last year, an upward revision from an initial estimate of 1.4%.

- Elliot Smith

Here are the opening calls

Shortly before 6 a.m. London time, two hours before market open, Britain's FTSE 100 was seen around 18 points higher at 7,490, Germany's DAX was expected to climb by around 44 points to 13,264 and France's CAC 40 was set to add around 18 points to 6,405.