(Bloomberg) -- European equities edged lower on Tuesday, ending a five-day gaining streak as a drop in energy shares outweighed recent optimism over rate cuts in the US.
The Stoxx Europe 600 Index ended the session 0.5% lower, as a weaker oil price hit energy shares and banking stocks fell. Germany’s DAX index dropped 0.3%, capping its longest winning streak since 2014.
Risk assets globally took a knock at the start of the month as worries over a slowing US economy spooked investors, hitting high-flying stocks like technology particularly hard. In Europe, a rebound across more defensive pockets of the market including telecom stocks and health care has helped the Stoxx 600 Index’s recovery and put it in sight of a record high.
“It’s healthy, generally, for markets to experience little falls every now and again just to remind people that the market isn’t an escalator — it doesn’t just go up, and that it can go down as well,” said Michael Field, European market strategist at Morningstar.
Strategists are holding onto their optimism for European stocks, with a Bloomberg survey predicting that the Stoxx 600 Index will surpass the record high set back in May.
As investors bet that interest rates cuts will prop up equity valuations, tomorrow’s release of US Federal Reserve minutes and a speech from Fed Chair Jerome Powell at the Jackson Hole symposium at the end of the week will be key for clues as to the path of interest rates.
Among individual movers, Coloplast A/S fell after the Danish medical products maker’s earnings came in just shy of analyst estimates, and Norwegian salmon farmer Salmar ASA also dropped as results disappointed. BT Group Plc’s shares dropped nearly 7% after major client Sky agreed to roll out broadband services on a network run by a fast-growing rival.
For more on equity markets:
- European Equities Seen Moving Past August Turmoil: Taking Stock
- M&A Watch Europe: i3 Energy, Volue, Bouygues
- Companies Relisting in New York See Valuation Boost: ECM Watch
- US Stock Futures Unchanged; Fabrinet, Palo Alto Networks Gain
- It’s Home Browsing Season: The London Rush
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--With assistance from Michael Msika.
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