Europe stocks edge lower in first reaction to Fed minutes

Europe

European stocks drifted lower on Thursday, after indications that the U.S. Federal Reserve last month wasn’t aggressively looking to cut interest rates in the world’s largest economy.

Down 2.6% for August heading into the day, the Stoxx Europe 600 SXXP, +0.12%  fell 0.29% to 374.70.

The German DAX DAX, +0.32%   declined 0.18% to 11781.75, the French CAC 40 PX1, -0.01%  declined 0.35% to 5416.34 and the U.K. FTSE 100 UKX, -0.33%  weakened 0.59% to 7161.15.

What’s happening

Minutes from the Federal Open Market Committee’s last meeting, released after European stock markets had closed on Wednesday, showed the central bankers generally favored an approach “that avoided any appearance of following a preset course.” Traders will now look to the key Jackson Hole conference and the speech from Federal Reserve Chairman Jerome Powell on Friday for interest-rate direction from the world’s largest economy.

“The market is well ahead of the economic data, with over 100 [basis points] of policy rate cuts priced in for the next year, which raises the question of whether the Fed can change the future outlook and re-steepen the yield curve with any new forward guidance this week. With a short-term consumer-led recession looking unlikely, the confidence factor hinges on the balance between rapidly diminishing central bank stimuli and open-ended global political headwinds,” said Lena Komileva, chief economist of G-Plus Economics, in a note to clients.

After a 240-point surge for the Dow Jones Industrial Average DJIA, +0.93%   on Wednesday, U.S. stock futures ES00, +0.23%  edged lower.

In Europe, IHS Markit reported that flash French manufacturing PMI reached a 2-month high and that services PMI rose to a 9-month high in August, while German manufacturing PMI inched up to a 2-month high, with services PMI falling to a 7-month low.

Read: European economy sees slight recovery from trade tensions in August, PMI data shows

Focus stocks

NMC Health NMC, +26.14%  , a health services provider in the United Arab Emirates, jumped 26% in London after Reuters reported it has two competing bids to buy a 40% stake. The company also said it’s seeking approval for a $200 million share buyback and reported an 18% rise in first-half profit.

Premier Oil PMO, +6.64%  rallied nearly 5% as the oil producer said it will sell its stake in a Mexican project and reported record output in the first half of the year. The company is looking to expand its production in the Catcher Area of the North Sea.

Medical equipment maker Ambu AMBU.B, -6.90%   dropped 13% in Copenhagen after issuing its second profit warning in two months. The company said it was looking to have full control of its U.S. sales force as it enters the ENT and urology markets.

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