European equities opened on Friday with cautious sentiment, as investors positioned themselves ahead of U.S. Federal Reserve Chair Jerome Powell’s anticipated speech at the Jackson Hole symposium. The mood was restrained, with early losses reflecting both macroeconomic headwinds and investor reluctance to take fresh positions before clarity on U.S. monetary policy.
Early trading trends
The STOXX 600 index slipped around 0.1 per cent in early trading, though it remains on course to register a third consecutive weekly gain. Germany’s DAX fell about 0.2 per cent after data confirmed the economy had contracted by 0.3 per cent in the second quarter. The revision underlined the pressure facing Europe’s largest economy, with sluggish industrial output and weakening exports weighing on prospects.
The FTSE 100 in London also edged lower, pausing its recent run of gains, while France’s CAC 40 drifted sideways. Currency markets reflected the same tentative mood: the euro dipped around 0.2 per cent to $1.1589, while the pound traded flat against the dollar.
Economic signals
Despite the weak German GDP print, the eurozone saw encouraging data from August’s Flash Composite PMI, which rose to 51.1, marking its highest level in 15 months. The figure signalled accelerating business activity, particularly in services, and gave some support to market sentiment. Analysts noted the data could be an early sign of manufacturing stabilisation following a prolonged downturn.
Investor caution
However, attention is firmly on Jackson Hole. Powell is due to deliver remarks that may clarify whether the Fed will proceed with a rate cut in September or adopt a more cautious stance. European traders are particularly sensitive to U.S. policy signals, given the implications for global borrowing costs, capital flows, and the euro’s trajectory.
Outlook
The combination of better-than-expected PMI data and ongoing policy uncertainty has left European markets finely balanced. While some optimism persists, especially in sectors exposed to services demand, the broader picture remains one of restraint until Powell sets the tone later today.
REFH – Newshub, 22 August 2025
Recent Comments