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European stocks edged higher on Tuesday, as investors awaited a number of data releases later in the week to gauge the next policy moves of global central banks.
Europe’s region-wide Stoxx 600 added 0.3 per cent, lifted by gains in the real estate sector. Trading volumes were thin as US markets were closed for the Independence Day holiday.
The UK’s FTSE 100 was 0.1 per cent higher, while France’s Cac 40 was flat. Germany’s Dax lost 0.2 per cent, dragged down by losses in energy and basic materials stocks. The Stoxx 600 Basic Resources index dropped 0.5 per cent.
The declines came after fresh data showed German exports decreased 0.1 per cent in the month to May, as high interest rates continued to weigh on the country’s main trading partners. The reading fell well below analysts’ expectations of a 0.3 per cent rise.
“Trade is no longer the strong resilient growth driver of the German economy that it used to be but rather a drag,” said Carsten Brzeski, global head of macro at ING.
“The expected slowdown of the US economy . . . high inflation and high uncertainty will clearly have an impact on German exports,” he noted.
Oil prices rose on Tuesday, after two of the world’s biggest producers, Saudi Arabia and Russia, said they would cut supply next month.
Brent crude, the international benchmark, added 1.67 per cent to trade at $75.91 per barrel, while US marker West Texas Intermediate rose 1.76 per cent to $70.99
Meanwhile, traders prepared for the closely watched US payroll data to come out on Friday, in the hope of gauging the impact high interest rates have had on the economy 16 months into the Federal Reserve’s tightening campaign.
The US unemployment rate is expected to have inched down to 3.6 per cent in June, according to a Reuters’ poll of economists, in a sign that the labour market remained relatively resilient to high borrowing costs.
“If you get a number which is close to consensus . . . equities would like it”, said Mohit Kumar, chief Europe financial economist at Jefferies.
“We could get a positive reaction from the equity market because the feeling will be that the Fed is close to done in its rate hiking . . . and the economy is still quite strong”, he noted.
Stocks rose in Asia, after the Reserve Bank of Australia opted to hold interest rates steady at 4.1 per cent while policymakers watched for the impact of previous rate rises on the economy.
Policymakers were guided by a faster-than-expected decline in the country’s annual inflation rate, which dropped to a 13-month low of 5.6 per cent in May from 6.8 per cent a month earlier.
The move encouraged investors who feared central banks would over-tighten their monetary policy in an effort to stamp out persistent price pressures.
Australia’s S&P/ASX 200 stock index rose 0.5 per cent after the announcement, while China’s CSI 300 added 0.2 per cent and Hong Kong’s Hang Seng was up 0.6 per cent. Japan’s Topix was the region’s outlier, down 0.6 per cent.
