On Friday, European key stock indices rose slightly following the readings of the US stock market. By the end of Thursday, the main US stock indices soared by 1-1.7%.
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Moreover, the market participants awaited the US Federal Reserve Chairman Jerome Powell's speech at the economic symposium in Jackson Hole. Moreover, it might give a hint to the regulator's plans to tighten its monetary policy.
At the time of writing, the STOXX Europe 600 index of Europe's leading companies increased by 0.09% to 433.77 points. Shares of Swedish oil and gas company Orron Energy AB and Swiss online pharmacy Zur Rose Group AG topped the list of losers among the STOXX Europe 600. They added 4.9% and 3.8% respectively.
Meanwhile, the French CAC 40 gained 0.04%, the German DAX rose by 0.01%, and the British FTSE 100 added 0.22%.
Top gainers
Shares of Scandinavian airline SAS AB rose by 1% despite the company increasing its net loss in the third quarter of fiscal 2022 amid flight cancellations and pilot strikes.
The market capitalization of Swiss commodities and rare earth supplier Glencore went up 0.5%.
Shares of Luxembourg metallurgical company ArcelorMittal advanced by 1.3%.
Stocks of Australian mining company BHP Group gained by 0.6%.
The shares of Australian-British mining and metallurgical concern Rio Tinto soared by 1.7%.
Market sentiment
On Friday, European investors were focused on US Federal Reserve Chairman Jerome Powell's speech at the economic symposium in Jackson Hole.
Last week, some of the participants of the US Federal Reserve's meeting argued in favor of reducing the pace of prime rate hikes as part of monetary policy tightening. At the same time, many other policymakers said that it would be better to keep the rate permanently high to bring inflation down to the 2% target.
According to US Fed Chair Jerome Powell, the interest rate is currently at a neutral level. Despite this fact, many investors fear that the US Fed Chair will make a statement about a sharp tightening of monetary policy and dash hopes for a rate cut next year.
This dilemma was probably finally resolved on Friday during Powell's speech. He determined how significantly the Federal Reserve could tighten its monetary policy.
According to North American financial derivatives market CME Group, 58.5% of analysts predict a 75 basis points increase of the key interest rate in September.
Against this background, global market makers are worried about the prospects for the global economy amid record inflation and permanent rate hikes by world's central banks.
Since the start of the week, traders have been avoiding decisive moves and refraining from trading risky assets, which include European stocks. Market experts also increasingly state that there will be few reasons for market optimism in the near future.
On Friday, the additional negative factor for the European stock market became the internal statistics on the EU countries.
According to the GfK research company, in September the leading consumer confidence index in the German economy hit the next anti-record for all the time of its calculation collapsing to minus 36.5 points from minus 30.9 points in August amid concerns over rising energy costs. At the same time, experts on average predicted a decrease in the indicator only to minus 31.8 points.
Meanwhile, the consumer confidence index in the French economy unexpectedly rose to 82 points from 80 points in July, the lowest reading since the summer of 2013. The August increase was the first in the last eight months. Moreover, analysts on average had expected the index to rise to only 79 points.On Friday morning, it became known that British energy market regulator Ofgem would raise its cape on consumer energy bills by 80% to a record $4,189 a year beginning October 1 after an April increase of 54%. The amount is expected to increase again in January 2023 due to UK competition with other countries for limited gas supplies.
Previous trading results
On Thursday, European stock indices rose amid the publication of strong data on the business climate and GDP in Germany.
Consequently, the STOXX Europe 600 index of Europe's leading companies rose by 0.3% to 433.36 points. The day before, shares of Danish manufacturer of diagnostic equipment Ambu A/S and Swedish oil and gas company Orron Energy AB topped the list of gainers among the STOXX Europe 600. They advanced by 8.2% and 7.5% respectively.
Meanwhile, the German DAX gained 0.39%, the British FTSE 100 added 0.11%, and only the French CAC 40 sank by 0.08%.
The shares of Swiss pharmaceutical company Novartis AG dropped by 0.75%. The day before, the company said that it was planning to spin off the Sandoz division and place its shares on the Swiss stock exchange to create a key European company for the production of generics.
The shares of German energy company RWE AG grew by 0.3%. The company is buying Polish solar cell maker Alpha Solar as part of a strategy to strengthen its renewable energy business in Central Europe.
The market capitalization of British oil and gas company British Petroleum soared by 2% amid a sharp rise in global oil prices.
The shares of Norwegian fertilizer maker Yara International rose by 0.8% even though the chemical giant said it was planning to cut its production permanently amid high gas prices.
On Thursday, European investors were focused on the euro area's fresh statistics.
According to the final assessment of the Federal Statistical Office of Germany, in April-June the country's gross domestic product rose by 1.8% year-on-year and by 0.1% quarter-on-quarter. At the same time, the market was expecting the economy to grow only by 1.5% in annual terms.
Meanwhile, the country's Business Climate indicator (business confidence in the economy) fell less than forecasted to 88.5 points in August from a revised reading of 88.7 points in July. The final figure is at its lowest since June 2020. However, it was better than experts' forecast of 86.8 points.
France's Insee National Statistics Office reported on Thursday morning that the country's business confidence index dipped to 104 points in August from 106 points in July. At the same time, experts had expected the index to reach 105 points.
Despite the lingering energy crisis, strong EU statistics boosted investor sentiment ahead of the US Federal Reserve's annual symposium in Jackson Hole.