European equity markets were little changed on Thursday as investors weighed cautious comments from leading central bankers against regional economic data while awaiting the release of a closely watched U.S. employment report.
The pan-European STOXX 600 hovered around 638.66 points in early trading after ending the previous session at its third-highest closing level on record. The benchmark gained more than 10% over the previous quarter.
Trading across the region was subdued. Germany’s DAX slipped 0.2%, France’s CAC 40 added 0.3%, London’s FTSE 100 eased 0.1%, while Italy’s FTSE MIB traded broadly flat.
Europe avoids technology-led sell-off
Although technology stocks came under renewed pressure across Asian markets overnight, European equities proved relatively resilient.
The region’s lower exposure to the world’s largest technology companies compared with U.S. and Asian markets helped cushion European indices from the latest weakness in the sector.
However, that defensive positioning also meant European markets captured less of the powerful artificial intelligence-driven rally that propelled global equities to record highs during the previous quarter.
Sintra comments reinforce cautious rate outlook
Investor sentiment remained restrained following comments from policymakers attending the European Central Bank’s annual forum in Sintra, Portugal.
Federal Reserve officials and ECB President Christine Lagarde indicated that while inflation risks are becoming more balanced, it remains too early to expect a rapid shift towards more accommodative monetary policy.
Lloyds Bank analysts said, “The ECB has retained a cautious approach as fears of ‘second-round’ effects linger.”
They added, “The market is pricing for another 25-basis-point hike by September, then an extended hold through to the middle of next year, pushing back against a more inflationary scenario.”
U.S. jobs report remains the key focus
Attention has now turned to the U.S. non-farm payrolls report, which is expected to provide fresh direction for global financial markets.
Economists forecast that around 100,000 jobs were created in June. Investors will scrutinise the figures for clues about the Federal Reserve’s next policy moves and whether expectations for up to two interest rate cuts by the end of the year remain justified.
Sodexo leads gainers
Among individual stocks, Sodexo (EU:SW) climbed more than 7% after reporting stronger-than-expected third-quarter revenue and raising its full-year sales guidance.
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