European shares opened lower on Friday as investors became cautious ahead of the Jackson Hole symposium in the United States. The symposium will feature speeches from major central bank heads, including U.S. Federal Reserve Chair Jerome Powell and European Central Bank President Christine Lagarde. These speeches are crucial in gauging the outlook for interest rates and determining if central banks are close to the end of their tightening cycle. Additionally, rising bond yields continued to impact stocks, with rate-sensitive real estate and growth-sensitive technology sectors experiencing declines.
Despite the overall negative sentiment, energy stocks rose 0.6% due to advancing crude oil prices, while basic resources added 0.2% on higher metal prices. However, the pan-European index fell 0.1%, although it is on track for its first weekly gain in the past four weeks. Furthermore, Germany’s economy stagnated in the second quarter compared to the previous three months, following a winter recession. The corrected timing for Christine Lagarde’s speech is at 1900 GMT, rather than 1700 GMT as mentioned in the article.
In conclusion, European shares started the day on a downward trend due to investor caution before the Jackson Hole symposium. The impact of rising bond yields continued to negatively affect stocks, but energy and basic resources sectors managed to record slight gains. The speeches from central bank heads, especially Jerome Powell and Christine Lagarde, play a crucial role in shaping the outlook for interest rates. Additionally, the German economy’s stagnation in the second quarter signals the challenges it faces after a previous recession.