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European stocks showed mixed performance on Tuesday as investors treaded cautiously ahead of a slew of economic data, including the crucial U.S. jobs report due on Friday. While the pan-European STOXX 600 index remained flat, German stocks reached an all-time high, buoyed by easing inflation and positive sentiment surrounding interest rates.
German Stocks Reach New Heights
The German market led the gains, with the DAX index inching up by 0.2% to hit a record peak. This uptick continued the positive momentum from the previous session, driven by recent indications of easing inflation and favorable interest rate expectations. Daniela Hathorn, a senior market analyst at Capital.com, noted, “We saw a little bit of indecision in the decks yesterday, a bit of rebalancing there, but we still have some positive momentum in European stocks.”
Attention is now turning to the U.S. payrolls data scheduled for Friday, with investors keenly awaiting insights into the labor market. Hathorn added, “I think there’s going to be a lot of emphasis on this August (U.S. payrolls) data. It might not provide any surprise or any insights, and it may just continue showing the current trend, but I think investors are very wary going into it.”
In the industrial sector, Rolls-Royce provided a significant boost with a 4.4% rise. The British aerospace and defense giant was recovering from its largest single-day drop this year, following an engine component failure at Cathay Pacific Airways. Cathay Pacific reported that three of the 48 Rolls-Royce-powered planes inspected had been successfully repaired, with all jets expected to resume operations by Saturday.
Investors will be closely monitoring remarks from European Central Bank (ECB) policymakers Claudia Buch, Jose Manuel Campa, and Kerstin af Jochnick throughout the day. Their comments could provide insights into the ECB’s potential moves ahead of the scheduled rate decision on September 12. Currently, money markets fully anticipate a 25 basis point rate cut by the ECB, with expectations of a total easing of 57 basis points by the end of 2024.
Energy shares faced pressure, sliding 0.5%, as Brent oil prices fell. The decline was attributed to concerns about sluggish economic growth in China, the world’s largest crude importer, which overshadowed the impact of halted production and exports from Libya.
Stock Movers
- Partners Group: Slipped 7.2% to the bottom of the STOXX 600 following a miss in earnings expectations for the first half of the financial year.
- Ashtead Group: Rose 3.6% after maintaining its annual profit forecast despite a drop in quarterly earnings. The company also announced the appointment of a new finance chief, replacing Michael Pratt, who is retiring next year.
