European stocks closed on a somewhat positive note on Wednesday despite falling from morning highs and struggling for support for much of the session post noon.
The mood was cautious as investors looked ahead to the Federal Reserve’s monetary policy announcement, due later in the day. The Fed is widely expected to keep interest rates near zero for a prolonged period. The central bank’s views on inflation, unemployment and overall economic growth are in focus.
The Bank of Japan and the Bank of England are scheduled to come out with their monetary policy announcements on Thursday.
Markets were digesting the latest batch of economic data from the zone and tracking Brexit news and updates on coronavirus cases for direction.
The Organisation for Economic Cooperation and Development (OECD) raised its global economic forecast for 2020 as output picked up swiftly following the easing of confinement measures and the initial re-opening of businesses.
The pan European Stoxx 600 ended up 0.58%. Germany’s DAX advanced 0.29% and France’s CAC 40 edged up 0.13%, while the U.K.’s FTSE 100 slid 0.44%. Switzerland’s SMI moved up 0.3%.
Among other markets in Europe, Austria, Belgium, Denmark, Finland, Ireland, Netherlands, Norway, Portugal, Spain and Sweden ended on firm note.
Czech Republic, Greece, Iceland, Poland, Russia and Turkey closed weak.
In the German market, Fresenius gained nearly 2.5%. Deutsche Bank, Deutsche Post, Siemens, Merck, Lufthansa, HeidelbergCement and Adidas moved up 1 to 2%, while Wirecard, Bayer, Fresenius Medical Care and Allianz ended weak.
In France, Unibail Rodamco, ArcelorMittal, Airbus Group, Kering, Orange, Publicis Groupe and Sodexo gained 1.2 to 2.5%.
Renault, Peugeot, Credit Agricole, Bouygues, Societe Generale, BNP Paribas and Valeo ended weak.
In the UK market, TUI declined more than 6%. Rolls-Royce Holdings ended lower by 5.3%. Melrose and Morrison Supermarkets both ended lower by nearly 4%.
HSBC Holdings, Aviva, Rio Tinto, BAE Systems and Hikma Pharmaceuticals also ended sharply lower.
On the other hand, Royal Mail jumped more than 6%. Ferguson, Mondi, British Land Company, Land Securities, 3i Group, Experian, BHP Group, Lloyds Banking Group, WPP and Aveva also ended with impressive gains.
European Commission President Ursula von der Leyen warned that the chances of the bloc securing a trade deal with the U.K. were fading by the day, with Prime Minister Boris Johnson’s government planning to violate international law by reneging on parts of the Brexit Withdrawal Agreement.
On the economic front, the euro area trade surplus increased for the third straight month in July to reach pre-pandemic levels, data published by Eurostat showed. Exports grew by a seasonally adjusted 6.5% and imports advanced 4.2% on a monthly basis in July. As a result, the trade surplus increased to EUR 20.3 billion from EUR 16.0 billion in June.
Exports of goods decreased 10.4% annually and imports dropped 14.3%. Consequently, the trade surplus climbed to an unadjusted EUR 27.9 billion in July from EUR 23.2 billion in the same period last year.
According to a report from the Office for National Statistics, UK inflation slowed in August, easing to a less-than-expected 0.2% from 1% in July. Prices were forecast to climb 0.1%.
Month-on-month, consumer prices dropped 0.4%, offsetting a 0.4% rise in July. Economists had forecast a 0.6% fall.
The Czech Republic’s producer prices declined for the fifth straight month in August, figures from the Czech Statistical Office showed.
The OECD raised its global economic forecast for 2020 as output picked up swiftly following the easing of confinement measures and the initial re-opening of businesses.
According to the interim economic outlook report, released Wednesday, the global economy will shrink 4.5 percent this year instead of 6 percent fall estimated in June. Meanwhile, the growth projection for 2021 was revised down to 5 percent from 5.2 percent.
However, the agency cautioned that the outlook is subject to considerable uncertainty and projections are dependent on assumptions about the spread of the Covid-19 virus and policy developments.
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