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European stocks were experiencing solid gains on Thursday, with the Stoxx 600 index up by half a percentage point by lunchtime. The index was trading at 516.39, an increase of 0.46%, drawing closer to the record closing high of 524.68 achieved in May. The Stoxx 600 has risen in 11 of the past 13 trading sessions, showing a more than 6% increase since 5 August.
The positive sentiment was bolstered by gains on Wall Street and Asian markets overnight, following minutes from the latest Federal Reserve policy meeting and a downward revision to labor market data. These developments reinforced expectations for a potential interest rate cut in September. Attention is now turning to the Federal Reserve's economic symposium in Jackson Hole, Wyoming, scheduled for Friday, where Chairman Jerome Powell is anticipated to discuss the central bank’s current view on the US economy.
In Europe, the composite purchasing managers' index (PMI) for the eurozone improved to 51.2 from 50.2, surpassing the 50.1 reading forecast by analysts. However, data from Germany painted a less favorable picture. Figures from HCOB indicated a deepening economic downturn in Germany, with the manufacturing PMI contracting more than anticipated and growth slowing in the services sector. The overall composite PMI for Germany fell to 48.5 in August from 49.1 in July, missing the 49.2 consensus estimate.
Joshua Mahony, chief market analyst at Scope Markets, commented on the situation: “Once again, we have seen signs of economic distress from the German manufacturing sector, with the decline to 42.1 marking the lowest point in five months. While the Paris Olympics helped drive a sharp uptick in French services sector activity, the data this morning reinforces concerns about potential weaknesses within the eurozone economy that the ECB will need to address.”
In the UK, the S&P Global flash PMI composite output index rose to 53.4 from 52.8 in July, reaching a four-month high and exceeding expectations for a reading of 52.9.
Market Movers
JD Sports Fashion (LSE:JD), a London-listed sports apparel and footwear retailer, saw a notable increase of 7%. The company reported a return to like-for-like growth in its second quarter, with its expansion in North America and Europe contributing positively. It maintained its full-year profit outlook.
Swiss Re (LSE:0QL6), the Swiss insurance giant, also performed well, rising by 3% after surpassing forecasts with its second-quarter profits and reaffirming its guidance for the full year.
German banking group Deutsche Bank (LSE:0H7D) gained 3% following a settlement with a significant portion of Postbank shareholders in a long-running legal dispute regarding the price paid during the 2008 takeover.
The largest decline on the Stoxx 600 was seen in Danish group GN Store Nord, which experienced a 9% drop after disappointing second-quarter results in its hearing aids, speakerphones, videobars, and headsets division.
