by Pauline Foret
(Reuters) – European stocks ended higher on Wednesday, lifted by gains in mining-related stocks, as investors awaited the minutes of the Federal Reserve’s July policy meeting.
In Paris, the CAC 40 ended up 0.5% at 7,524.72 points. The British Footsie gained 0.12% and the German Dax 0.51%.
The EuroStoxx 50 index gained 0.58%, the FTSEurofirst 300 0.33% and the Stoxx 600 0.32%.
The mining sector lifted European stocks, with the basic resources index gaining 1% after aluminium futures hit a record high in Shanghai on supply bottlenecks for raw materials.
Earlier, final U.S. payrolls data for March were revised down, showing 818,000 fewer jobs than previously estimated.
The figures, marking the largest preliminary revision since the 2008 financial crisis, could encourage the Federal Reserve to cut its key rates in September.
“The balance of risks has shifted, so the debate about a rate cut in September is appropriate,” Neel Kashkari, president of the Minneapolis Fed, said in an interview with The Wall Street Journal. Until then, Kashkari had stressed the importance of ensuring inflation returned to the Fed’s 2% target, even if that meant leaving rates unchanged through the end of the year.
Investors are still waiting for the release of the minutes of the Fed’s July meeting, scheduled for around 1800 GMT, which could give them clues about the future of US monetary policy.
While the possibility of the Fed cutting rates seems to have been confirmed with the revision of the labor market figures, the question remains whether it will decide to cut them by 25 basis points or take a more aggressive approach with a 50 basis point cut.
“The labor market appears weaker than initially reported. A deterioration in the labor market will allow the Fed to emphasize both sides of its dual mandate and investors should expect the Fed to prepare markets for a taper at the September meeting,” wrote Jeffrey Roach, chief economist at LPL Financials.
“A weaker-than-expected jobs market could pave the way for a half-percentage-point cut in September,” he added.
VALUES
Eye care specialist Alcon fell 2.5% after reporting second-quarter results that missed expectations.
Grifols gained 6% after Bloomberg reported that Brookfield has asked banks to guarantee up to $10 billion for the potential private takeover of the Spanish pharmaceutical group.
Watkin Jones fell 30% after missing second-quarter profit forecasts.
A WALL STREET
At the time of the European closing, Wall Street is showing a slight increase, awaiting the publication of the “minutes” of the last Fed meeting around 18:00 GMT.
In values, Target gained 12.11% after raising its profit forecast for 2024.
Macy’s is down 11.56% after lowering its annual net sales forecast.
Keysight Technologies climbs 12.2% after reporting revenue that beats consensus.
CHANGES
The dollar was mixed on Wednesday after the release of revised U.S. labor market data, although the odds that the Federal Reserve will take an aggressive approach to rate cutting did not change.
The dollar lost 0.20% against a basket of reference currencies.
The euro, strengthened by the weakness of the American currency, rose 0.08% to 1.1138 dollars.
The pound sterling, meanwhile, gained 0.34% against the dollar and 0.26% against the euro.
RATE
Faced with the possibility of a Fed rate cut in September, yields continue to fall.
The yield on 10-year Treasuries fell 2.6 basis points to 3.7915%, compared with a 5.9 basis point drop to 3.9410% for the two-year.
The yield on the ten-year German Bund fell 0.6 basis points to 2.1950%, compared with a 0.7 basis point drop to 2.3620% for the two-year.
OIL
Oil prices edged higher on Wednesday, regaining some ground after several days of declines linked to weak Chinese demand and the possibility of a ceasefire in Gaza.
Brent gained 0.22% to $77.37 per barrel, while US light crude (West Texas Intermediate, WTI) gained 0.07% to $73.22.
TO BE CONTINUED ON THURSDAY:
The Jackson Hole Symposium, the grand mass of the world’s central banks, will open on Thursday, August 22.
Elsewhere, investors will digest several economic indicators, including PMI indices in France, Germany and the United Kingdom, as well as weekly jobless claims in the United States and the consumer confidence index in the Eurozone.
In Zurich, Swiss Re will report its second quarter results.
(Written by Pauline Foret, edited by Kate Entringer)
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