TSX gains after CPI shows US inflation rose 3%
Investing.com - European stocks rose Friday after Fed chair Jerome Powell’s speech at the Jackson Hole symposium. Earlier in the session, European indices were weighed down by German economic weakness.
The DAX index in Germany gained 0.3% and the FTSE 100 in the U.K. increased 0.1%, while the CAC 40 in France rose 0.4%.
Germany’s economy contracted in Q2
Sentiment was hit on Friday by the release of disappointing growth data from Germany, the eurozone’s dominant economy.
The eurozone’s largest economy shrank by 0.3% quarter-on-quarter in the second quarter, compared with a prior estimate of a 0.1% decline, following a 0.3% expansion in the first quarter.
On an annual basis, GDP grew by just 0.2%, after seasonal and calendar adjustments.
The statistics office also sharply revised down GDP figures for 2023 and 2024. As a result, Germany’s economic output remains slightly below its 2019 level, underscoring a prolonged period of stagnation.
Powell’s speech
However, markets rose after Federal Reserve Chair Jerome Powell signaled that the U.S. central bank was open to cutting interest rates during his highly anticipated speech at the Jackson Hole symposium.
Powell indicated that the U.S. economy was on sufficiently shaky ground that the central bank may soon need to cut interest rates.
“Downside risks to employment are rising,” Powell said in prepared remarks for his keynote speech at the annual symposium. “With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” he added.
The likes of European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey are also scheduled to appear on various panels.
Trade deal details
Investors are fretting about the details of the trade deal struck between the European Union and the United States late last month.
The agreement does not currently include the wine and spirits sector, European Union Trade Commissioner Maros Sefcovic said on Thursday.
The EU Trade Commissioner emphasized that the door is not permanently closed to lowering tariffs for the wine and spirits sector, along with other sectors not covered by the existing deal.
While expressing commitment to address this issue in future talks, Sefcovic acknowledged the challenges ahead, stating, "I don’t want to say that it will be easy, regarding reaching agreement with U.S. on wines and spirits sector."
Investor takes stake in Akzo Nobel
In the corporate sector, Dulux paints maker Akzo Nobel (AS:AKZO) stock rose after activist investor Cevian Capital took a 3% stake, according to a filing by Dutch market regulator AFM.
Air Liquide (OTC:AIQUY) has agreed to acquire South Korea’s DIG Airgas (NYSE:ARG) from Macquarie Asia-Pacific Infrastructure Fund 2 in a deal worth €2.85 billion, the French industrial gases company said on Friday.
Mediobanca (OTC:MDIBY) shareholders rejected a plan to buy Banca Generali (BIT:GASI) on Thursday, dealing a blow to the Italian merchant bank’s attempts to thwart a hostile takeover by state-backed Monte dei Paschi di Siena.
Crude prices on track for weekly gains
Oil prices edged higher Friday, on track to snap a two-week losing streak, amid increasing signs that peace negotiations between Russia and Ukraine were stalling.
At 12:04 ET, Brent futures gained 0.1% to $67.71 a barrel, and U.S. West Texas Intermediate crude futures rose 0.2% to $63.63 a barrel.
Both contracts climbed more than 1% in the prior session. Brent has risen 3% this week, while the WTI has gained around 1.4%.
The three-and-a-half-year war in Ukraine continued unabated on Thursday, and traders are pricing in more risk that the supply of Russian crude to the global market remains disrupted.