European stocks fall ahead of Powell speech as banks slide

A cautious mood prevailed in European equity markets on Thursday as investors looked ahead to the U.S. Federal Reserve Chairman Jerome Powell’s outlook on monetary policy.

The pan-European STOXX 600 index slipped 0.3%, with banks.SX7P being the biggest drags after HSBC fell 2.2%. The British bank came under fresh U.S. criticism on Wednesday for its reported treatment of customers linked with the pro-democracy movement in Hong Kong.

Tech stocks .SX8P extended gains after another record-setting session on Wall Street. [.N]

Investors will be looking for clues on the U.S. central bank’s new strategy for meeting its price stability and maximum employment goals amid a deep economic crisis caused by the coronavirus pandemic. Powell is set to speak at 1310 GMT.

“It’s hard to imagine Powell’s going to say much more that is particularly supportive,” said Chris Beauchamp, chief market analyst at IG. “It’s going to be a speech that perhaps marks a high-water mark for risk in the short term.”

European Central Bank chief economist Philip Lane is also scheduled to speak at the virtual Jackson Hole meeting.

Germany’s exporter-heavy DAX .GDAXI posted minimal losses as data showed profit at China’s industrial firms grew for a third straight month in July and at the fastest pace since June 2018.

The auto sector .SXAP, up 0.7%, was among the few gainers.

Barring the German manufacturing sector, recent data has pointed to the plateauing of an economic recovery in the euro zone as several countries see a resurgence in coronavirus cases.

A Reuters poll of fund managers showed European stocks are expected to stall for the rest of 2020 and miss out on the bull market, which has propelled Wall Street to record highs.

WPP, the world’s biggest advertising company, jumped 4.7% as it resumed its dividend after cost cuts and a switch to faster ad production helped it to beat dire forecasts for second-quarter trading.

Smaller rival Publicis rose 1.2%.