Europe open: Shares make cautious start; Smurfit Kappa slumps

by | Sep 12, 2023

(Sharecast News) – European shares opened cautiously higher on Tuesday as investors digested UK jobs data and were cheered by an easing of property worries in China as troubled developed Country Garden won some breathing space on bond payments.
The pan-European Stoxx 600 index was up 0.20% in early deals after a positive session on Wall Street.

In the UK, wage growth remained at its highest level in 22 years in July, but the unemployment rate ticked higher, according to figures released on Tuesday by the Office for National Statistics.

Average regular earnings growth was unchanged at 7.8% in the three months to July, above consumer price inflation of 6.8%, while the unemployment rate nudged up to 4.3% from 4.2%.

Growth in average total pay – which includes bonuses – was 8.5% in July, up from 8.2%, as one-off payments to NHS workers and civil servants after deals to end strike action provided a boost.

The number of job vacancies in the three months to August was 989,000, down 64,000 from the previous quarter, the ONS said.

”Caution is in the air today as investors assess stubborn wage growth in the UK and wait for other key data, which may help determine the direction of interest rates, as speculation swirls over how far hiking cycles have left to go,” said Hargreaves Lansdown analyst Susannah Streeter.

“Sentiment is erring on the positive, helped by an easing of property woes in China. Debt-laden giant Country Garden has won creditor approval to extend payments on some bonds adding to a slightly more optimistic take on China’s economic prospects. Brent Crude has inched up a little, ahead of key market insight reports later, still supported by extended supply cuts.”

In other economic news, German wholesale prices fell for the fifth month in a row in August due to lower prices for mineral oil products, data from the federal statistics office showed.

Wholesale prices declined by 2.7% in August compared to the same month last year.

On the equities front, Smurfit Kappa shares tumbled on Tuesday after the company said it had agreed to merge with US rival WestRock in a deal that will create a $20bn packaging giant.

Reporting by Frank Prenesti for

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