European Markets React Positively To Powell’s Comments On Taper, Close Modestly Higher

European stocks closed on a positive note on Friday, after U.S. Federal Reserve Chairman Jerome Powell said the central bank will begin reducing its bond purchases this year, but added that the bank is unlikely to hike interest rates anytime soon.

Geopolitical concerns following the developments in Afghanistan where two explosions near the Kabul airport killed 13 U.S. service members and wounded several people weighed on sentiment and limited markets‘ gains.

U.S. President Joe Biden vowed to hunt down the terrorists and make them pay for the deadly attacks after the ISIS claimed responsibility for the blasts.

The pan European Stoxx 600 climbed 0.43%. The U.K.’s FTSE 100 gained 0.32%, Germany’s DAX ended 0.37% up and France’s CAC 40 gained 0.24%. Switzerland’s SMI moved up 0.24%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Finland, Iceland, Netherlands, Norway, Poland, Russia, Spain, Sweden and Turkey closed higher.

Denmark, Greece, Ireland and Portugal ended weak.

In the UK market, Anglo American Plc, Antofagasta, Pershing Square Holdings, BHP Group, BP and Evraz gained 2 to 3%.

Rio Tinto, Royal Dutch Shell, Melrose Industries, Whitbread, Fresnillo, IAG and Intercontinental Hotels also ended notably higher.

Just Eat Takeway.com shares plunged more than 7% after the New York City Council approved legislation to permanently cap commissions delivery apps can charge restaurants.

Sainsbury (J) ended nearly 3% down, and Ocado Group declined 1.4%.

In France, Faurecia climbed nearly 3% after Citigroup hiked its target price on the stock.

ArcelorMittal, STMicroElectronics, Technip and Unibail Rodamco gained 1.5 to 3%. Thales and Atos also ended with strong gains.

Bouygues declined 2.5%. BNP Paribas ended lower by about 1.25%.

In the German market, Infineon Technologies, Beiersdorf, Continental and Siemens gained 1 to 1.5%.

Vonovia SE shares moved up after the real estate company said it has placed corporate bonds totaling 5 billion euros with an average coupon of 0.49%. Based on high investor demand, the company said it was able to secure very attractive conditions.

Deutsche Bank and Fresenius Medical Care declined sharply.

In economic news, Germany’s import price inflation accelerated in July to its highest level in four decades, preliminary data from Destatis showed Friday.

The import price index climbed 15% year-on-year after a 12.9% increase in July. Economists had forecast an rise of 13.6%. The latest rise was the strongest since September 1971, when import prices rose 17.4%, Destatis said. Compared to the previous month, import prices rose 2.2%.

A report from Insee said the consumer confidence indicator in France fell by one point to 99 in August 2021, slightly below market expectations of 100 and back below its long-term average.

Annual growth in the euro area money supply and lending to the private sector slowed in July, figures from the European Central Bank showed.

The annual growth rate of the broad monetary aggregate M3 fell to 7.6% from 8.3% in June. The average for the three months to July was 8.1%.

Data from Sweden’s National Institute of Economic Research showed that the country’s economic confidence weakened in August. The economic tendency indicator rose to 121.1 in August from 121.9 in July.

Finland’s consumer confidence weakened and industrial morale improved in August, as per separate survey results. Statistics Finland said the consumer sentiment index decreased to 4.0 in August from 4.4 in July.

During his much anticipated speech at the Federal Reserve’s annual Jackson Hole symposium this morning, Jerome Powell said the central bank is likely to begin tapering some of its easy-money policies before the end of the year. However, he added that he still feels there’s “much ground to cover” before rate hikes.

Powell said the economy has reached a point where it no longer needs as much policy support, indicating the Fed might start reducing the amount of bonds it purchases each month before the end of 2021, provided the economy continues to progress.

He added that while inflation is solidly around the Fed’s 2% target rate, “we have much ground to cover to reach maximum employment,” which is the second prong of the central bank’s dual mandate and necessary before rate hikes happen.