Retail gains support European stocks, Fed in focus
|09/16/2020 | 05:08am|
A fourth day of gains in retail stocks nudged European equities higher on Wednesday as Zara-owner Inditex posted a quarterly profit, although UK blue-chip stocks came under pressure after a surge in the previous session.
The pan-European STOXX 600 index inched 0.3% higher, extending a winning run this week.
Inditex said current trade showed a progressive return to normality with online sales growing sharply and store sales recovering, pushing its shares 6.3% higher. The retail sector was up 1.1%.
London's blue-chip shares were dragged lower by a weakness in the banking sector. A bright spot in the market was a 26.4% surge in shares of the Hut Group, the first major British initial public offering in seven years.
Signs of compromise emerged on the Brexit front, with Reuters reporting that Britain offered tentative concessions on fisheries in trade talks with the European Union last week, just as London was threatening to breach the terms of its divorce deal with the bloc.
"The only catalyst that I can see for European equities is Brexit that could push markets one way or the other," said Julien Lafargue, head of equity strategy at Barclays Private Bank.
"Europe, in our mind, is a trading market. You want to buy Europe when everybody hates it, you want to sell it when everybody loves it. At this stage, we're at a neutral."
After a bounce from March lows, the STOXX 600 has been stuck in a range even as Wall Street has hit record highs as investors fret about a resurgence in coronavirus cases and its impact on a nascent economic recovery.
Markets globally appeared to be in a holding pattern ahead of the U.S. Federal Reserve's policy announcement, which is due at 1800 GMT.
Investors are expecting somewhat rosier economic forecasts from the central bank, with a renewed pledge to keep interest rates low for as long as the U.S. economy needs to recover from a pandemic-driven downturn.
Swiss plumbing materials company Geberit rose 1% after saying it would buy back shares worth up to 500 million Swiss francs (426.93 million pounds) over two years.
Sweden's Handelsbanken rose 2.6% after revealing plans to close almost half of its branches and cut about 1,000 jobs over the next two years.
(Reporting by Sruthi Shankar in Bengaluru; editing by Uttaresh.V and Anil D'Silva)
By Sruthi Shankar