LONDON – European stock markets rose on Wednesday, rebounding cautiously after ending a long winning streak on Tuesday.
The pan-European STOXX 600 index was up 0.2% at 9:47 a.m. London time, with sectors mixed. Mining stocks rose 1.1%, technology rose 0.45%, while oil and gas fell 0.47%.
The regional benchmark index closed in the red on Tuesday, ending a strong run that had continued since the global sell-off from Aug. 1-5.
Stoxx 600 Index.
Net public sector borrowing in the UK rose to £3.1 billion ($4.037 billion) in July, up £1.8 billion from a year earlier, according to the Office for National Statistics. It was announced Wednesday. The figure was above consensus forecasts of £2.5bn, while borrowing in the first four months of the year was £4.7bn higher than the independent Office for Budget Responsibility forecast in March.
“This continues the recent spate of bad news on the fiscal situation,” said Alex Kerr, UK economist at Capital Economics. Even if spending does not continue to beat expectations, the new Labour government’s first budget on October 30 is expected to include tax increases, Kerr added.
It was a quiet week for European data, with the exception of the preliminary Eurozone PMI numbers on Thursday.
Instead, attention turns to the United States, with the release of Federal Reserve meeting minutes on Wednesday, ahead of Fed Chairman Jerome Powell’s speech at the closely watched central banking symposium in Jackson Hole on Friday.
Markets have long expected a Fed rate cut in September, but sentiment has become more mixed on whether the cut will be 25 or 50 basis points. According to CME’s FedWatch tool, the odds of a cut are 67.5% for the first cut and 32.5% for the second.
Powell is not expected to offer firm guidance on the future path, but his words will be parsed for a more hawkish or dovish tone.
His comments come amid debate over the health of the US economy, after US retail sales for July and weekly initial jobless claims beat expectations.
“The situation is not very far from ideal, if you think about it,” Charles-Henri Monchaud, chief investment officer at Sez, told CNBC’s “Squawk Box Europe” on Wednesday. “We have inflation that continues to decline, economic growth that is still decent — with signs of weakness but still resilient — the earnings season was very good, and the Fed is very close to starting to cut interest rates.”
“If you put all of this together, the conditions in the stock markets are still very good. There are a lot of risks out there, but the headline is still good,” Monschau said.
Asia-Pacific markets were broadly lower on Wednesday, following a losing session on Wall Street.
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