Europe close: Stocks gain as investors digest Warsh's debut Jackson Hole speech

(Sharecast News) - European stocks ended firmly in the black on Friday as investors digested Federal Reserve chair Kevin Warsh's debut speech at the Jackson Hole Symposium in Wyoming.

The benchmark Stoxx 600 index ended up 0.5% at 655.16, Germany's DAX closed 0.8% higher at 26,569.99 and France's CAC 40 rose 1% to 8,401.18.

Warsh, who so far has remained tight-lipped about his views on the US economy, said prices remain too high and hinted at possible rate hikes in the coming months if price pressures don't ease.

"It's the Fed's job to deliver stable prices, no excuses," he said. "We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do."

TD Securities said: "Chair Warsh struck a broadly bullish tone on growth while emphasizing inflation as the Fed's primary concern. He aligned himself with more centrist officials who have lowered the bar for renewed tightening if inflation progress stalls. However, he stopped short of signaling a September hike and our base case remains for the Fed to stay on hold.

"Beyond reiterating his data-dependent approach, Warsh offered little new policy guidance. He stressed major questions around AI, rejected a mechanical reaction function and forward guidance, reaffirmed the 2% inflation target, and emphasized the importance of rate policy, money supply, and less Fed communication.

"Warsh's comments boosted rate-hike odds and terminal-rate pricing, though markets may have overreacted given the Fed's September decision remains highly dependent on upcoming payrolls and inflation data."

Investors were also mulling data released earlier which showed signs of rising price pressures in France, Spain and Germany on the back of a renewed surge in energy prices.

The annual rate of consumer price inflation in France jumped to a three-month high of 2.4% in August, Spanish inflation hit a three-year high of 4.3%, while German import prices surged 6.8% year-on-year in July, marking the highest rate since late-2022.

Elsewhere, figures from the European Commission showed that economic sentiment in the eurozone improved in August. The EC's economic sentiment indicator rose to 98.4 from 97.1 in July, beating consensus expectations for a reading of 97.5.

The economic sentiment indicator for the EU ticked up one point to 98.2 this month.

The European Commission said the improvement in sentiment was driven by higher confidence in industry, services and retail trade, while confidence in construction and among consumers was broadly stable.

Among individual countries, the ESI improved by 2.3 points in France, 1.3 points in Germany and 0.8 points in Italy. The indicator for the Netherlands dipped 0.1 point, while Poland and Spain saw declines of 0.5 and 2.2, respectively.

Corporate news was thin on the ground, though shares of Austrian construction firm Strabag ended up nearly 15% after an upgrade to its full-year profit guidance. The bright outlook followed a 12% increase in output volumes in the first half and a record order backlog.

In the UK, defence contractors BAE Systems and Babcock both lost ground on news that new chancellor John Healey will delay setting out when the UK will meet the target of spending 3% of GDP on defence until next year's spending review.