European stocks give up early gains as euro dips on ECB rate pause expectations

World stocks were pulled in two directions on Friday after investors hoping for more dovish remarks from Federal Reserve chair Jerome Powell instead got a balanced message that the Fed does not think the inflation fight is over, but it will proceed “carefully” in its next move.

In remarks delivered at the central bank conference in Jackson Hole, Wyoming, |Mr Powell said inflation was still too high even with recent favourable readings, and that the US central bank has substantial ground to cover to regain price stability.

Markets are split almost evenly on whether the ECB will hike at its meeting next month, compared with around a 60 per cent chance of a September hike before weak activity data was published earlier this week.

Dublin

The Iseq traded marginally up, bucking the European trend.

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Iseq heavyweight Ryanair fell by 1.2 per cent to €15.70.

As central bankers in Europe pondered the likelihood of another rate hike, bank shares moved in different directions. Bank of Ireland fell 0.33 per cent to €9.15, while AIB moved up 0.5 per cent to €4.25.

Food groups Kerry and Glanbia both tracked up by approximately 1 per cent, while insulation maker Kingspan fell by the same margin. Flutter Entertainment rose, meanwhile, by 0.7 per cent to €164.55.

Europe

European shares also gave up earlier gains to slip 0.14 per cent, and the euro fell to its lowest since mid-June on expectations that the ECB could pause its tightening cycle next month.

ECB policymakers are increasingly concerned about deteriorating growth prospects and momentum for a pause in its rate hikes is building, Reuters reported, citing sources with direct knowledge of the discussion.

London

London’s top index inched higher as sterling sank to its lowest for 10 weeks. Sterling has been on a downward path over the past week amid fresh speculation from analysts that the Bank of England will pause recent interest rate rises after its September meeting. It lost some steam against the dollar on Friday as the US currency was boosted by Fed boss Mr Powell signalling that there is still scope for increasing interest rates again.

The FTSE 100 moved 0.07 per cent, or 4.95 points, higher to finish at 7,338.58 as London’s multinational firms were boosted by the currency movement.

Elsewhere, trading platform CMC Markets was another significant faller after it warned over profits due to “subdued market conditions”. It said income for the year would be between £250 million and £280 million, down from the previous prediction of £280 million to £290 million as it suffers a particularly tricky August. Shares fell by 11.8p to 110.2p by the close of play.

Aston Martin Lagonda shares had a lift after brokers from Jefferies upgraded the stock on an improving balance sheet and optimism about its growth outlook. The luxury car maker saw shares rise 17.2p to 338p.

New York

Wall Street’s main indexes edged higher in volatile trading on Friday as investors assessed events at Jackson Hole. Investors had keenly awaited the Fed chair’s speech after a spate of strong economic data, including a fall in last week’s jobless claims, dampened hopes that the authority could be close to the end of its rate-hike cycle.

Still, the tech-heavy Nasdaq was on track to gain 0.9 per cent this week, largely due a rally in megacap growth stocks in the run up to Nvidia’s second-quarter results, which were reported on Wednesday. The index was also set to snap three straight weeks of losses.

Shares of Marvell Technology fell 7.6 per cent after the chipmaker posted a fall in second-quarter revenue, hit by a weak enterprise market.

Clothing firm Gap rose 4.4 per cent after the company beat second-quarter profit estimates, while Nordstrom dropped 10.9 per cent after the department store chain left its forecasts unchanged.

Hawaiian Electric dropped 17.4 per cent after the county of Maui sued the power company and S&P downgraded its credit rating amid scrutiny over its role in the Maui wildfires. – Additional reporting: Reuters