European stocks rose, led by bond-proxy sectors such as utilities, as weak economic data prompted bets the region’s central bank will pause its rate-hike campaign.
(Bloomberg) — European stocks rose, led by bond-proxy sectors such as utilities, as weak economic data prompted bets the region’s central bank will pause its rate-hike campaign.
The Stoxx Europe 600 closed 0.4% higher, paring an intraday gain of as much as 0.8%. Utilities and real estate were the best performers as bond yields fell across the region, while retail stocks lagged after US footwear chain Foot Locker Inc. cut its full-year forecast.
Among individual stocks, Roche Holding AG rose after it accidentally disclosed data from a crucial study of one of its new cancer medicines, which hinted that the trial could be ultimately successful.
Purchasing managers index readings from Europe’s two top economies on Wednesday highlighted the risk that output in the 20-nation bloc will shrink this quarter, leading investors to bet that the European Central Bank will pause its campaign of interest-rate hikes next month. Meanwhile, attention among traders is also turning to Federal Reserve Chairman Jerome Powell’s Jackson Hole speech on Friday.
Read: Euro-Area Downturn Quickens as Services Start Shrinking
European stocks dropped earlier in August, as bond yields soared amid concerns central banks will keep interest rates higher than previously expected. Concerns about China’s economic recovery have also weighed on risk appetite.
The Jackson Hole discussions “will most likely refer to the growing evidence that the economy appears to be better able to cope with higher interest rates than it has been over the past decade,” said Leonardo Pellandini, an equity strategist at Bank Julius Baer. It “should provide important clues as to how permanent the current high level of interest rates will be and how reluctant the Federal Reserve and other central banks will be to cut rates in the future if inflation rates continue to fall.”
Pellandini’s team prefers US equities over European stocks, as they’re less exposed to the Chinese consumer, he added.
However, Deutsche Bank AG strategists Maximilian Uleer and Carolin Raab said European stocks are so cheap that their valuations reduce the risk of any major declines.
Read more: Big Discounts Shield European Stocks, Deutsche Bank’s Uleer Says
For more on equity markets:
- Bears Look to Jackson Hole to Shake Up the Market: Taking Stock
- M&A Watch Europe: Sobi, EQT, Arm, Man United, QPR Software
- UK Stock Market Revival Sputters as Arm Opts for US: ECM Watch
- US Stock Futures Little Changed; Driven Brands Gains
- Microsoft Tries to Sway British Watchdog Again: The London Rush
You want more news on this market? Click here for a curated First Word channel of actionable news from Bloomberg and select sources. It can be customized to your preferences by clicking into Actions on the toolbar or hitting the HELP key for assistance. To subscribe to a daily list of European analyst rating changes, click here.
–With assistance from Sagarika Jaisinghani and Kit Rees.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.