European shares rise as French stocks rebound; markets digest Warsh speech
Most European sub-sectors were higher
European shares climbed on Friday (Aug 28) as French stocks rebounded from the previous session's decline, while investors analyzed Federal Reserve Chair Kevin Warsh's speech at Jackson Hole. The pan-European Stoxx 600 index finished the day 0.5% higher at 655.16 points, marking a slight weekly increase after two weeks of declines.
France's CAC 40 index rose about 1% after dropping to a month-long low earlier in the week, as concerns about the government's capacity to control public spending ahead of next year's elections unsettled investors. French banks Societe Generale, BNP Paribas, and Credit Agricole climbed between 1% and 1.9%, rebounding from previous session losses.
EssilorLuxottica surged 2.4% after announcing a share buyback scheme, signaling a 2.3% gain for luxury stocks, their best day in over a month. However, fresh data highlighted the obstacles facing France's economy. Second-quarter GDP growth was revised downward to flat from a preliminary 0.2% increase, indicating weaker-than-expected momentum in the euro zone's second-largest economy.
Charlotte de Montpellier, a senior economist at ING, noted that these figures suggest the economy nearly entered a technical recession in the first half of the year. De Montpellier stated that additional fiscal consolidation steps will be necessary in 2026 to keep the public deficit below 5%. Without further actions, and with growth remaining sluggish, the deficit might increase even further than last year.
Fitch is anticipated to reassess France's credit rating later in the day, following its downgrade of the country to a record-low A+ a year ago. Markets also evaluated Warsh's Jackson Hole address, with the Federal Reserve chair stressing the importance of bringing inflation back to the central bank's 2% target, while providing limited insight into forthcoming policy actions.
Jeffrey Roach, chief economist at LPL Financial, described the Fed chair's speech as heralding "a new era of monetary policy, marked by less signalling, a stronger focus on real-time data, and a readiness to reconsider economic first principles as AI transforms the economy's productive potential." Traders have ramped up their expectations for European Central Bank rate hikes in recent weeks, as the ongoing Israeli conflict with Iran has once again driven up energy prices, negatively impacting the Stoxx 600.
Most European sectors were in the green, with energy stocks, the week's worst performer, climbing 0.3%. Automakers posted a 2.5% rise, the biggest boost in more than two months, led by BMW, which added 4.5% to its shares. Other notable gains included Strabag, which jumped 15.8% to a record high after the Austrian construction firm revised its annual outlook upward.
Belgium's Ackermans & Van Haaren increased 8.2% after releasing first-half results and raising its earnings growth forecast.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
Also reported by 1 other outlet
- US markets end slightly lower after Warsh speech news.rthk.hk
