Europe open: Shares make solid start despite weak German PMI data

European stock markets made a solid start to trading on Wednesday, as investors awaited eurozone PMI survey data and earnings from US tech giant Nvidia.

The pan-regional Stoxx 600 index was up by 0.46%, with all regional bourses higher. Markets are also starting to turn their attention to the US gathering of central bankers at Jackson Hole this weekend for any clues on the future path of interest rates.

“Investors will be eager for clues as to how long the fight against inflation will continue, where interest rates will end up and just how long they will stay at painful levels,” said Hargreaves Lansdown analyst Susannah Streeter.

“While worries about the effect of an embedded price spiral are still brewing, partly due to super-strong job markets, there is also growing unease at the splintering impact on economies caused by the sledgehammer policy of hiking rates rapidly.”

In economic news, German business activity suffered the steepest decline for more than three years in August, according to latest flash PMI survey compiled by S&P Global, as a deepening downturn in manufacturing output was accompanied by a renewed contraction in services activity.

“Businesses remained pessimistic towards the outlook as rising interest rates, customer uncertainty and high inflation continued to weigh on demand for goods and services. Notably, the survey showed an increase in inflationary pressures, driven by accelerated cost and price increases in the service sector,” S&P said.

The headline composite PMI Output Index remained fell for the fourth month in a row from July’s 48.5 to 44.7, the index moved deeper into sub-50 contraction territory to its lowest since May 2020.

Reporting by Frank Prenesti for Sharecast.com