European stocks rose on Tuesday as a slew of supportive economic data from the US and UK, as well as China’s measures to support its economy, fueled investor risk appetite.
(Bloomberg) — European stocks rose on Tuesday as a slew of supportive economic data from the US and UK, as well as China’s measures to support its economy, fueled investor risk appetite.
The Stoxx 600 Index closed 1% higher in London, with all sectors in the green. Miners and telecoms led gains. The UK’s FTSE 100 index also rose following Monday’s holiday, gaining 1.7%. Figures showing that food inflation in Britain cooled to the lowest level in almost a year in August lifted domestic stocks like Ocado Group Plc.
Equities got a boost after US job openings fell in July by more than expected, showing that the labor market is gradually re-balancing, while US consumer confidence also fell by more than expected in August, adding to hopes that the Federal Reserve could pause its interest-rate hike campaign next month. A Bloomberg report that China’s biggest state-owned banks are weighing further cuts to deposit rates helped sentiment, following on from weekend stimulus measures.
Among individual stocks, Dutch insurer NN Group NV jumped as analysts were positive on its results against a tough macroeconomic backdrop, and distribution and services group Bunzl Plc gained after its first-half earnings beat estimates.
European equities have trimmed this year’s gains in August amid worries over higher-for-longer interest rates and a crisis in China’s property market. The cyclical mining and auto industries have seen the biggest losses so far this month.
JPMorgan strategist Mislav Matejka wrote in a note that sectors such as autos, capital goods, retail and banks, which are more dependent on the economic cycle, “can show another leg lower” as he also expects bond yields to retreat.
Questions still remain regarding the path of central bank policy, with investors keeping an eye out for euro-area inflation and China’s PMI numbers later this week.
“This week, markets will look for clues on the ECB and Fed’s next moves,” said Susana Cruz, a strategist at Liberum Capital. “With the Eurozone heading towards recession, it seems increasingly likely that a dovish case will realize in September and cuts might happen sooner than it is currently expected.”
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–With assistance from Farah Elbahrawy.
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