EUROPE’S benchmark stock index closed at a near two-week high on Tuesday (Aug 13), as growing hopes of an interest rate cut from the US Federal Reserve in September offset a drag from weak earnings from the likes of Swiss medtech firm Tecan.
The continent-wide Stoxx 600 index closed 0.5 per cent higher. While healthcare and utilities were the top sectoral gainers, basic resources was the worst hit.
In continued evidence of moderating inflation, data showed US producer prices rose less than expected in July, keeping the Fed on track to cut rates in September.
US consumer prices and retail sales data, due later in the week, will also be parsed for clues on the health of the world’s largest economy after recession fears choked risk assets globally earlier this month.
“Most economies (that) were seemingly invincible are now slowing, which includes the world’s largest, namely the US, China, and the eurozone. But recession risk is still low,” wrote Alejandra Grindal, chief economist at Ned Davis Research.
Markets now expect a total of around 100 basis points of US rate cuts by the year’s end, according to LSEG’s FedWatch Tool.
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A Reuters poll showed the European Central Bank is expected to cut its deposit rate twice more this year, fewer reductions than previously expected.
Among other data, Spain’s final European Union-harmonised 12-month inflation rate fell to 2.9 per cent in July, from 3.6 per cent in the period to June, while German investor morale darkened more than expected in August, posting its strongest decline in two years.
Spain’s benchmark stock index led regional gains with a 0.7 per cent rise, as Germany, France, London and Italy’s gained between 0.2 per cent and 0.5 per cent.
The so-called fear gauge index also hit a near two-week low.
At the bottom of the Stoxx 600, Tecan Group slumped 17.3 per cent, logging its steepest one-day fall since 2002, following weaker than expected half-year figures and a lower full-year outlook.
Fortnox dropped 14 per cent after news that CEO Tommy Eklund would leave the Swedish accounting solutions firm.
On the flip side, Pandora rose 3.7 per cent after the world’s largest jewellery maker raised its full-year growth outlook.
HelloFresh jumped 19 per cent following better than expected second-quarter core earnings, as the German meal-kit maker enjoyed strong growth in its ready-to-eat (RTE) unit.
French engineering company GTT climbed 5 per cent after Berenberg upgraded the stock to “buy”.
Meanwhile, British homebuilder Bellway rose 4 per cent after unexpectedly dropping its £720 million (S$1.2 billion) bid to buy smaller peer Crest Nicholson, sending Crest’s shares down more than 20 per cent. REUTERS
