LONDON — European stocks opened modestly higher on Wednesday, cautiously rebounding after a long winning streak was snapped on Tuesday.
The pan-European Stoxx 600 index was up 0.1% as of 8:33 a.m. London time, with sectors mixed: mining stocks rose 1.26% and communications stocks were down 0.2%.
Regional stock indexes closed lower on Tuesday, halting a strong run that had continued since the global selling pressure from August 1-5.
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Stoxx 600 Index.
The Office for National Statistics said on Wednesday that net borrowing by the U.K. public sector rose to 3.1 billion pounds ($4.037 billion) in July, up 1.8 billion pounds from a year earlier. The figure beat the consensus forecast of 2.5 billion pounds and put borrowing in the first four months of the year at 4.7 billion pounds higher than the independent Office for Budget Responsibility's March forecast.
“This follows a string of recent bad news about the public finances,” said Alex Kerr, UK economist at Capital Economics. Even if spending does not continue to beat expectations, tax increases are expected in the new Labour government's first budget, due on October 30, Kerr added.
The European data front is quiet for the rest of the week apart from the release of flash euro zone purchasing managers' index figures on Thursday.
Attention is now shifting to the United States, where Federal Reserve meeting minutes will be released on Wednesday ahead of a speech by Federal Reserve Chairman Jerome Powell at a highly-anticipated central banking symposium in Jackson Hole on Friday.
The market has long been pricing in a Fed rate cut in September, but sentiment is shaky on whether the cut will be by 25 or 50 basis points, with the former having a 67.5% chance and the latter a 32.5% chance, according to CME's FedWatch tool.
Powell is not expected to offer clear guidance on the way forward, but his comments are likely to be interpreted as leaning more hawkish or more dovish.
His comments come amid ongoing debate over the health of the US economy following better-than-expected US retail sales and weekly jobless claims in July.
“If you think about it, inflation continues to fall, economic growth is still decent and holding up despite some signs of weakness, earnings season is looking pretty strong and the Fed is about to start cutting rates. So when you think about that, we're not that far from Goldilocks,” Bankis Chief Investment Officer Charles Henry Monchaux said Wednesday on CNBC's “Squawk Box Europe.”
“Taking all this together, the stock market situation is still pretty good. There are a lot of risks, but the headlines are still good,” Monchaux said.
Asia-Pacific markets were broadly lower in Wednesday trading, following losses on Wall Street.
