Markets

European Markets Close Weak Despite Coming Off Lower Levels

(RTTNews) - European stocks ended on a negative note on Thursday, despite staging a fairly good recovery from lower levels during the closing hours after the Federal Reserve Chairman Jerome Powell outlined historic changes to Fed's monetary policy strategy.

Concerns over rising U.S.-China tensions and lingering worries about the impact of the coronavirus pandemic rendered the mood cautious.

While the United States blacklisted 24 Chinese firms and targeted individuals it said were part of construction and military actions in the South China Sea, Beijing fired four missiles into the world's most hotly contested body of water, further ratcheting up tensions between the two countries.

The pan European Stoxx 600 declined 0.64%. The U.K.'s FTSE 100 slid 0.75%, Germany's DAX shed 0.71% and France's CAC 40 ended down 0.64%, while Switzerland's SMI closed lower by 0.67%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Ireland, Netherlands, Norway, Portugal, Russia and Spain ended weak.

Poland and Sweden declined marginally, while Iceland and Turkey closed higher.

In the U.K. market, Anglo American, Persimmon, CRH, Evraz, Standard Chartered, Johnson Matthey, Schroders, Ashtead Group, Antofagasta, Rio Tinto and Astrazeneca lost 1.7 to 2.7%.

Among the gainers, WPP shares climbed more than 6.5% as the company returned to paying dividends after cost cuts and a switch to faster ad production.

Carnival surged up 5.4% and Compass Group advanced 4.3%, while IAG, ITV, TUI, Aveva Group and EasyJet gained 3 to 4%.

In France, Technip slid nearly 2.5%. Engie, Schneider Electric, Air Liquide and Peugeot also ended notably lower.

Airbus shares gained nearly 3%. Valeo, Publicis Groupe and Accor gained 2.4 to 2.8%. Bouygues ended more than 2% up after reporting better-than-expected quarterly earnings. After reporting a first-half net loss, the French industrial group stated that it will return to significant profitability in the second half of 2020, without reaching the particularly high levels of second half 2019.

In the German market, Wirecard ended 3.4%, extending recent losses. Infineon Technologies shed about 2.1%, while Bayer, RWE, Deutsche Post and Munich RE lost 1 to 1.8%.

Delivery Hero shares declined sharply after the company announced the acquisition of online grocery service InstaShop.

Lufthansa rallied nearly 2.5%. Volkswagen and BMW ended modestly higher.

In economic news, French business sentiment continued to improve in August as confidence picked up in almost all sub-sectors, monthly survey data from the statistical office Insee showed Thursday.

Another industrial investment survey from the Insee showed that business managers downgraded their investment outlook for this year as they projected a double-digit contraction.

The business confidence index for manufacturers rose more-than-expected to 93 in August from 82 in July. The expected reading was 85. Business managers' assessment of past activity climbed sharply with the index rising to -2 from -41.

Switzerland's economy contracted at a record pace in the second quarter as economic activity was severely restricted amid the coronavirus pandemic, data published by the State Secretariat for Economic Affairs, or SECO, showed.

Gross domestic product fell 8.2% sequentially in the second quarter after falling 2.5% in the previous quarter.

This was the sharpest fall since records began in 1980. Economists had forecast a quarterly contraction of 8.6%.

Compared to the situation in the fourth quarter, before the coronavirus crisis, GDP slumped by a total of 10.5% in the first half of 2020. On a yearly basis, GDP declined 9.3% versus a 0.7% drop in the first quarter and economists' forecast of -9.6%.

Federal Reserve Chair Jerome Powell today announced a widely expected shift with regard to the price-stability side of the central bank's dual mandate.

During a live-streamed speech to the Jackson Hole economic symposium, Powell said that the Fed will change its approach to a "flexible form of average inflation targeting."

The Fed chief stressed that the longer-run goal continues to be an inflation rate of 2% but noted inflation will average less than that if it runs below 2% following economic downturns and never moves above that level even when the economy is strong.

Powell said appropriate monetary policy will therefore likely aim to achieve inflation moderately above 2% following periods when inflation has been running below that level.

The Fed chief's comments were seen as an indication the central bank will leave interest rates at near-zero levels for the foreseeable future even if there is an acceleration in the pace of inflation.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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