On Thursday, European shares closed the day higher, as there was a rise in tech and oil stocks. But, gains were capped due to rising concerns about a potential economic recession brought on by an energy crisis.
The continent-wide STOXX 600 index recorded gains of 0.3%. There was a 1.2% rise in energy shares that lifted them to a high of 12 weeks, with crude prices rising over concerns about supply.
Starting August 31st, supplies from Russia to Europe via the Nord Stream 1 pipeline will be halted for three days. This has put the region under pressure, as it aims to stock supplies for the winter ahead.
Market analysts said that their target for the STOXX 600 for the year-end was 410, but downside risks are increasing because of soaring gas prices.
Plus, there is also a possibility that Europe would enter a recession. There was a 1.0% gain in technology stocks, as they took their cues from their peers on Wall Street where mega-cap growth stocks climbed.
This was because the sole focus was the symposium of the Federal Reserve in Jackson Hole.
Analysts said that stocks had climbed after a day that had mostly been indecisive. European indices spent the day treading water, while US tech giants gave Wall Street a boost on the other side.
Ultimately, the markets were bracing for the speech of one man i.e. Jerome Powell, the US Fed’s chair.
He was due to give a speech on Friday in Wyoming that could prove clarity on what the US central bank’s policy will be going forward.
There was a 0.4% gain in the German DAX, with data showing a 0.1% expansion in the economy in the second quarter, surpassing expectations.
Another survey indicated that there would be a contraction in the third quarter and there was a decline in business morale in the month.
This year has seen the STOXX 600 index shed about 11%, as markets are evaluating the impact of rapidly increasing interest rates and soaring inflation on company earnings and consumer spending amidst an energy crisis.
The minutes from the previous meeting of the European Central Bank (ECB) showed that policymakers were worried about the high inflation getting entrenched when the economy could be going into recession.
Rate hikes of 100 basis points have been priced in by money markets from the European Central Bank (ECB) by October.
They have priced in a hike of 50 basis points in the September meeting, with a small chance of 75 basis points.
There was a 7.4% decline in Norwegian Air Shuttle after its second-quarter numbers turned out to be downbeat.
A 1.7% drop was also recorded in the Finnish utility Forum after it posted a net loss of about 7.4 billion euros.
There was also a 0.8% drop in shares of Novartis, as the Swiss group is planning on the spinning of Sandoz, which is its genetics unit.