European stocks rise as Fed Chairman announces more rate hikes

European stocks opened higher in the final trading week of August as traders weighed the prospect of higher interest rates from the US Federal Reserve and waited for the next economic data later in the week.

Germany’s DAX 30 rose 125 points at the open, or 0.8%, France’s CAC 40 rose 69 points, or 0.9%, and Italy’s FTSE MIB gained 207 points, or 0.7%. .

Markets are closed in the UK for a public holiday.

Market participants continue to reflect on a summary of comments from the Kansas City Federal Reserve’s annual retreat in Jackson Hole, Wyoming, last week. At the meeting, a group of central bankers met to discuss monetary policy and how to deal with persistently high inflation in many major economies.

The most followed speech of the event was that of the president of the Federal Reserve, Jerome Powell. The head of the US central bank said that inflation is still too high and that the Federal Reserve is willing to continue raising interest rates to control persistently high prices.

While Powell said the Federal Reserve could be accommodating, he added that it still has a long way to go to fight inflation.

“Although inflation has come down from its peak – a welcome development – it is still too high,” Powell said in prepared remarks in Jackson Hole.

“We are prepared to raise rates further if appropriate, and intend to keep policy tight until we are confident that inflation is sustainably declining toward our target.”

With inflation steadily declining – but still above target – in many major economies, attention is increasingly focused on how central bankers will respond to deteriorating growth prospects.

In Asia-Pacific, stocks started the week higher, with shares in mainland China and Hong Kong leading gains in the region.

This was despite concerns about structural issues in China’s economy, such as debt, demographics and Beijing’s deteriorating relationship with the West.

Within the Chinese market, shares of the world’s most indebted property developer, China Evergrande Group, fell 87% as trading resumed after 17 months.

Back in Europe, developments are calm on the business front, as the region has concluded a very intense earnings season.

Swiss bank Credit Suisse, now a UBS subsidiary after a government-facilitated takeover, posted a loss of 3.5 billion Swiss francs ($4 billion), according to a SonntagsZeitung report citing insiders. from the bank.

Later in the week, the US Department of Labor will release Nonfarm Payrolls showing the pace of job and wage growth, which could guide the Federal Reserve on how to proceed with its monetary policy.