By Anisha Sircar
(Reuters) -European shares were little changed on Wednesday, as a rise in defensive stocks countered worries over a looming energy crisis and gloomy growth outlook, while hawkish comments from some U.S. Federal Reserve officials also kept sentiment in check.
The pan-European STOXX 600 was flat in choppy early trade, hovering near one-month lows and weakened by a 1.2% loss in miners.
Defensive sectors including utilities led gains.
The benchmark fell for three straight days until Wednesday as markets assessed rising interest rates, bleak economic data, high inflation and a potential recession.
Additionally, European benchmark gas prices have tripled in a little over two months as a winter of unreliable energy supplies from Russia looms. [MKTS/GLOB]
“There was a strong global equity rally earlier led by the U.S. that dragged up Europe with it, but the European outlook is still very difficult,” said Graham Secker, Morgan Stanley’s chief European equity strategist.
“As we go into Jackson Hole, the market is beginning to reassess that rally, thinking the Fed is still going to stay hawkish, so we’re seeing some profit taking.”
Investors were cautious ahead of the symposium after Minneapolis Federal Reserve Bank President Neel Kashkari on Tuesday reiterated the Fed’s focus on controlling inflation ahead of all else.
“European inflation expectations are still rising while growth expectations are deteriorating, so the fundamentals continue to get more challenging for equities,” Secker said.
German 10-year government bond yields rose to a fresh 8-week high as inflation fears reinforced expectations for an aggressive monetary tightening path. [GVD/EUR]
Market focus was also on minutes from the European Central Bank’s last policy meeting due on Thursday that are likely to sound hawkish.
Among stocks, Richemont rose 2.4% after the company said Farfetch would acquire a 47.5% stake in the luxury goods group’s loss-making online fashion retailer YOOX Net-A-Porter and that Alabbar would take 3.2%.
Bavarian Nordic added 2.5% after the Danish biotech firm said it was making “every effort” to meet the high demand for its monkeypox vaccine around the world as it retained its business outlook for the year.
(Reporting by Anisha Sircar in Bengaluru; Editing by Sherry Jacob-Phillips and Anil D’Silva)