Aug 23 2024: European shares were mostly steady on Friday, experiencing mild turbulence as investors adopted a cautious stance ahead of Federal Reserve Chair Jerome Powell’s much-anticipated speech later in the day.
The pan-European STOXX 600 index edged up 0.1% to 516.37 by 0820 GMT.
Anticipation Builds Around Powell’s Speech
The Euro STOXX volatility index, often referred to as the “fear gauge,” saw an increase this week, currently standing at 15.88 points.
Despite hints from three Federal Reserve speakers on Thursday about a potential rate cut in September and their support for a “slow and methodical” approach, investors remained on edge, wary of any unexpected developments during Powell’s speech at the Jackson Hole symposium in Wyoming, scheduled for 1400 GMT.
Overnight, Wall Street also saw declines, with the three major indexes dropping between 0.4% and 1.67%.
“Powell never provides information lightly. We’re likely to get confirmation of a rate cut today, but I wouldn’t be surprised if he still sounds somewhat reluctant,” commented Daniela Hathorn, senior market analyst at Capital.com.
Bank of England Governor Andrew Bailey is also set to speak at the symposium later in the day.
London’s FTSE gained 0.2%.
STOXX 600 Trails Behind S&P 500
The STOXX 600 was on track to register a 1% gain for the week, marking a potential three-week winning streak, a pattern last seen nearly five months ago.
However, the index has lagged behind its American counterpart, the S&P 500, in terms of yearly performance. “There’s still momentum in the U.S. because we haven’t seen that rate cut yet. But in Europe, we’ve already seen the European Central Bank cut rates, and earnings have started to weaken. Investors are questioning what will drive momentum now,” Hathorn explained.
Europe’s oil and gas sub-index rose by 0.5% as oil prices climbed.
The technology sector was the biggest drag on the STOXX 600, falling by 0.8%.
Swiss food giant Nestlé dropped 1.5% after announcing the replacement of CEO Mark Schneider with company veteran Laurent Freixe.
Melrose Industries fell 5.3% after UBS downgraded the aerospace supplier’s rating from “buy” to “sell.”
