Sky launches broadband services on its CityFibre network; BT falls; SalMar falls as operating profit falls short of expectations; Coloplast falls after reporting “weak” third quarter EBIT margins; Riksbank cuts interest rates; German producer prices fall 0.8% year-on-year
Aug 20 (Reuters) – Europe's main stock indexes snapped a five-day winning streak on Tuesday, dragged down by heavyweight energy shares as investors focused on domestic economic data and prepared for a meeting of central bank governors in Jackson Hole this week.
The pan-European STOXX 600 index (.STOXX) closed down 0.5%, wiping out early gains and dropping from a nearly three-week high reached earlier in the day. All regional Asian bourses also fell into negative territory. Oil prices edged higher during the day but early losses sent the energy sector 2% lower, to its lowest in more than a week. A Reuters poll showed European stocks should see modest gains by the end of the year on central bank interest rate cuts, but strategists were still cautious about the outlook for the region's largest companies. Both the STOXX 600 and the blue-chip STOXX 50E (STOXX50E) have risen more than 7% so far this year, weathering heightened volatility that saw them drop below the key 500-point mark earlier in the month on fears of a U.S. recession.
“The Goldilocks theme and expectations that the Fed is nearing a turning point are strengthening risk-on sentiment,” OCBC strategists said.
“We cannot rule out a gradual unwinding of risk-on positions as the week progresses.”
Investors are now focusing on the minutes of the Federal Reserve's July policy meeting, due for release on Wednesday, and remarks from the central bank's most influential chairman, Jerome Powell, at the Jackson Hole conference in Wyoming on Friday.
Any concrete hints at a U.S. interest rate cut would provide a fresh boost to risk assets globally amid lingering concerns about the performance of the world's largest economy, although those concerns appear to have eased recently.
Among major individual stocks, Norwegian salmon farmer Salmar (SALM.OL) fell 7.4 percent after it reported weaker-than-expected operating profit and lowered its Icelandic fishing outlook. BT (BT.L) fell 6.4 percent, a blow to the telecoms giant as existing partner TV company Sky plans to launch broadband services on internet provider CityFibre's network. Danish medical equipment maker Coloplast (COLOb.CO) slid 5 percent after reporting third-quarter profits. Luxury goods (.STXLUXP) and autos (.SXAP) were among the few bright spots.
In Sweden, the central bank cut interest rates as expected and said it could accelerate policy easing if price pressures do not pick up, suggesting up to three more rate cuts by the end of the year.
But Swedish shares (.OMXSPI) Opens in a new tab fell 0.5%, ending a five-day winning streak.
In data terms, German producer prices fell 0.8% year-on-year in July, in line with expectations.
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Reporting by Pranav Kashyap and Ankika Biswas in Bengaluru; Editing by Shelley Jacob Phillips, Varun HK and Jonathan Oatis
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