European Markets Edge Higher Ahead of Crucial U.S. Jobs Data
European stock indices advanced modestly on Friday as investors positioned themselves ahead of the U.S. August employment report, which is expected to influence Federal Reserve monetary policy. The regional Stoxx 600 index rose 0.25% in mid-morning trading, buoyed by a 1.2% gain in mining stocks.
Orsted Shares Gain Following Shareholder Approval for Rights Issue
Danish offshore wind developer Orsted saw its shares climb 3% after securing shareholder approval for a $9.4 billion emergency rights issue. This move comes amid ongoing political challenges, including legal action against the Trump administration to resume construction on a stalled offshore wind project in New England.
Despite the positive shareholder support, Orsted revised its full-year earnings guidance downward to a range of 24 billion to 27 billion Danish kroner ($3.75 billion to $4.22 billion), attributing the adjustment to below-average wind speeds across its offshore portfolio. RBC Capital Markets characterized this earnings update as negative while noting anticipation for the upcoming rights issue prospectus.
Norwegian energy company Equinor confirmed it would participate in Orsted’s capital raise, committing nearly $1 billion and maintaining its 10% ownership stake.
Market Sentiment Bolstered by Anticipated Federal Reserve Rate Cut
Global equities and bonds experienced volatility earlier in the week amid concerns over high government debt levels and fiscal policy uncertainties, particularly in the United States. However, sentiment improved following stronger-than-expected U.S. payroll data on Thursday, which increased market confidence in a September Federal Reserve interest rate cut without triggering fears of a significant economic downturn.
The CME FedWatch tool indicated a 99% probability of a rate cut as of Friday morning. Market participants are closely monitoring the August jobs report, with economists surveyed by Dow Jones forecasting an increase of 75,000 jobs, anticipating a “Goldilocks” scenario where labor market conditions soften moderately.
UK Economic Data Suggests Steady Momentum
In the UK, July retail sales volumes rose by 0.6% month-over-month, surpassing economists’ expectations of a 0.2% increase, according to a Reuters poll. Additionally, data from lender Halifax showed house prices increased by 0.3% in August.
Paul Dales, chief UK economist at Capital Economics, noted that these figures indicate the UK economy maintained decent momentum at the start of the third quarter. However, he cautioned that discussions of potential tax increases in the upcoming November budget could lead to more cautious consumer behavior.
