Mixed signs in the Euromarkets, with German macros in focus

European indices continued to be mixed in Thursday’s trade, although they started sharply higher, with investors turning their attention to the latest economic data from Germany just before the start of the Federal Reserve’s economic conference.

Investor attention turned today to German macros which painted a mixed picture for Europe’s largest economy.

In particular, the German economy proved more resilient than initially estimated in the second quarter, showing marginal growth of 0.1% despite a rally in inflation and the war in Ukraine. Thursday’s data from the country’s statistics office was better than estimates for stagnation in the quarter to June.

At the same time, business confidence worsened slightly in August, with the Ifo institute’s relative index falling to 88.5 points in August, from 88.7 points in July.

Meanwhile, investors await the Fed’s annual conference which begins today, with all eyes on US central bank chairman Jerome Powell’s speech on Friday.

After aggressive hikes in US interest rates in recent months, investors are hoping the Fed will adopt a more dovish stance, moving ahead with smaller hikes in the near term so as not to derail economic growth. Analysts, however, expect the Fed chief to reiterate on Friday that the bank remains committed to bringing inflation back to its 2% target, from 8.5% today.

Federal Reserve Bank of Atlanta President Raphael Bostic said today that he has not yet decided whether the Fed should raise interest rates by 50 basis points or 75 basis points at its next meeting in September, the WSJ reports.

On the board, the pan-European Stoxx 600 index gained 0.2% to 432.73 points.

Germany’s DAX rose 0.2% to 13,250.88, France’s CAC 40 edged down 0.02% to 6,386.24, while Britain’s FTSE 100 gained 0.1% to 7,483.28.

In the region, the Italian FTSE MIB shows marginal changes, while the Spanish IBEX 35 gains 0.1%.