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European stock markets opened cautiously higher on Wednesday, as investors closely monitored escalating tensions in the Middle East and awaited fresh employment data from the Eurozone.
Key Market Movements:
- Germany’s DAX: Up by 0.1%
- France’s CAC 40: Rose by 0.3%
- U.K.’s FTSE 100: Climbed 0.3%
Escalating Middle East Conflict:
The situation in the Middle East remains tense, with Iran launching ballistic missiles against Israel in retaliation for the recent killing of Hezbollah leader Hassan Nasrallah and Israel’s deployment of ground forces in southern Lebanon. Although Iran has stated that the attack is over unless provoked further, Israel has promised a response, raising concerns about potential U.S. involvement.
Eurozone Focus: Unemployment & ECB Speakers
- Unemployment Data: Investors anticipate the Eurozone unemployment rate to stay at 6.4% for August.
- ECB Expectations: Following the recent inflation data, which showed a dip below the ECB’s 2% target, the possibility of a 25 basis-point rate cut this month has increased. Citigroup predicts a series of rate cuts starting from October 17 and continuing through 2025, potentially bringing the policy rate down to 1.5% by September 2025.
- ECB Speakers: Vice President Luis de Guindos and chief economist Philip Lane are expected to provide insights on the central bank’s stance.
Corporate News:
- JD Sports: The British sportswear retailer’s shares dropped by 3% despite beating first-half profit forecasts and maintaining its annual guidance.
- Nike: The sportswear giant’s shares are under pressure after it withdrew its annual revenue forecast and postponed an investor day, coinciding with the appointment of a new CEO.
Investors will continue to monitor the developments in the Middle East, as well as the ECB’s potential rate-cutting path, while digesting corporate earnings and guidance.
