European Stocks Gain as Traders Assess Outlook for Fed Rate Cuts

European equities gained, with investors assessing the outlook for interest rates as data showed US job growth was probably far less robust in the year through March than previously reported. 

The Stoxx Europe 600 was up 0.3% by the close. Resources, retail and automotive sectors led the gains, while telecommunication stocks were the biggest laggards. 

Among individual movers, Alcon Inc. dropped after its second-quarter sales undershot expectations, while Demant A/S advanced after Morgan Stanley analysts upgraded the stock twice to overweight.

European equities have been rebounding from a selloff earlier this month amid expectations of a soft landing and a growing conviction that the Federal Reserve will be dovish from here. 

Data showed the number of workers on US payrolls will likely be revised down by 818,000 for the 12 months through March — or around 68,000 less each month assuming they’re distributed proportionately — according to the Bureau of Labor Statistics’ preliminary benchmark revision. Economists had largely anticipated a decline, with some predicting a loss of as many as 1 million jobs.

Investors will now scour the minutes of the Fed’s latest policy meeting, due later Wednesday, for guidance about the path of interest rates and quantitative tightening ahead of Fed Chair Jerome Powell’s Jackson Hole speech on Friday.

“The market is supported by share buybacks and buying of systematic strategies in the next days,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg. “However, we believe risks are rising again in September, due to the US Presidential TV debate, worsening seasonality and also a higher positioning and less buyback support by then.”

Meanwhile, UK government borrowing came in higher than forecast in the first four months of the fiscal year, highlighting the pressure on Keir Starmer’s new Labour government to raise taxes or curb spending.

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With assistance from Sagarika Jaisinghani.

This article was generated from an automated news agency feed without modifications to text.