EUROPE’S Stoxx 600 ended near session-highs amidst broad-based gains on Friday (Aug 23), as global markets advanced after Federal Reserve chair Jerome Powell stated that “the time has come” to reduce interest rates.
The pan-European Stoxx 600 index rose 0.5 per cent to 518.13 at close, its highest level in over three weeks and clocking a weekly advance for the third straight week.
Speaking at the economic symposium at Jackson Hole in the US, Powell offered an explicit endorsement of an imminent policy easing, saying further cooling in the US job market would be unwelcome and expressed confidence that inflation was within reach of the US central bank’s 2 per cent target.
“The jury is still out if the Fed can successfully manage the risks to both sides of their dual mandate. However, chairman Powell could not be more clear – ‘the time has come for policy to adjust,’“ Jeffrey Roach, chief economist at LPL Financial noted.
Money market participants are all but certain about a rate cut in September, with 65.5 per cent leaning towards a 25 basis points one, as per the CME FedWatch Tool.
Rate-sensitive real estate jumped 1.3 per cent, hitting an over 18-month high, while utilities, often noted as a bond proxy, gained 1 per cent.
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Eurozone government bond yields slipped, in line with their US counterparts, with the yield on the German 10-year note, considered as the region’s benchmark, last at 2.229 per cent.
Most local bourses clocked gains, with Germany’s benchmark touching one-month highs, while the Spanish bourse scaled an over two-month high.
The tech sub-index lagged the broad rally, falling 0.6 per cent, bogged down by 1.7 per cent fall in Dutch firm ASML.
Meanwhile, a Reuters report showed that a growing number of European Central Bank policymakers are lining up behind another interest rate cut in September and only major data surprises in the coming weeks could delay the move.
Speaking at Jackson Hole, Bank of England Governor Andrew Bailey said he thought inflation pressure in Britain’s economy was becoming less stubborn than in recent years.
Among other headlining stocks, ALK-Abello jumped 12.2 per cent, topping the Stoxx 600 after the Danish allergy solutions maker beat second quarter revenue estimates and raised its full-year outlook.
UK’s Melrose Industries declined 7.1 per cent after brokerage UBS double downgraded the aerospace components supplier’s rating to “sell” from “buy”.
Nestle closed 0.1 per cent higher after falling as much as 4 per cent during the day. Three sources familiar with the matter told Reuters that the world’s biggest foodmaker’s chief executive Mark Schneider was ousted in a sudden move as a result of the group’s underperformance. REUTERS
