LONDON — European stock markets closed higher Wednesday, rebounding after snapping a long winning streak on Tuesday.
The pan-European Stoxx 600 index provisionally closed 0.32% higher on Wednesday as nearly all sectors traded positive. Autos climbed 1.45% and mining stocks added 1.02%, while telecoms dipped 0.24%.
The regional benchmark closed in the red on Tuesday, snapping a strong run that has lasted since the global sell-off across Aug. 1-5.
Stoxx 600 index.
U.K. public sector net borrowing rose to £3.1 billion ($4.037 billion) in July, up by £1.8 billion the previous year, the Office for National Statistics announced Wednesday. The figure was higher than a consensus forecast of £2.5 billion, while borrowing across the first four months of the year came in £4.7 billion above the independent Office for Budget Responsibility’s March forecast.
Alex Kerr, U.K. economist at Capital Economics, said it “continued the recent run of bad news on the fiscal position.” Even if spending does not continue to outpace forecasts, tax rises should be expected in the new Labour government’s first budget on Oct. 30, Kerr added.
It is a quiet remainder of the week on the European data front, save for flash purchasing managers’ index figures for the euro area on Thursday.
Attention is instead turning stateside, with the release of minutes from the Federal Reserve out Wednesday, ahead of Fed Chair Jerome Powell’s speech at the closely watched central bank symposium at Jackson Hole on Friday.
An interest rate cut by the Fed in September has long been fully priced in by markets, but sentiment is shakier over whether that will be by 25 or 50 basis points. According to CME’s FedWatch tool, probability stands at 67.5% for the former and 32.5% for the latter.
Powell is not expected to give firm guidance on the path ahead, but his words will be parsed for a more hawkish or dovish tone.
His comments come amid debate over the health of the U.S. economy, after U.S. retail sales for July and weekly initial jobless claims beat expectations.
“It’s not so far away from Goldilocks, if you think about it, we have inflation which continues to come down, economic growth is still decent — with signs of weakness but still holding up — earnings season was pretty good, and the Fed is very close to starting cutting rates,” Charles-Henry Monchau, chief investment officer at Bank Syz, told CNBC’s “Squawk Box Europe” on Wednesday.
“So if you put all of this together, the conditions for equity markets are still quite good. There are a lot of risks out there, but the headline is still decent,” Monchau said.
U.S. markets were last ticking higher on Wednesday. Elsewhere, Asia-Pacific markets had mostly pulled back as they followed Tuesday’s losing session on Wall Street lower.
