European stocks are up on hopes of fiscal stimulus

London — European stocks opened higher on Wednesday as hopes for more monetary and fiscal stimulus helped assuage worries about global recession, political turmoil in Italy and endless trade wars.

“People are looking ahead to Jackson Hole later this week and the message that [Fed chair] Jerome Powell may give us on the direction of monetary policy. That is the highlight of the week and we are waiting with bated breath,” said Andrew Milligan, head of global strategy at Aberdeen Standard Investments.

With so much riding on the Fed, investors were cautious and volumes subdued. The Euro Stoxx 600 was 0.6% higher, with Italy outperforming after a rout yesterday following the resignation of Italian Prime Minister Giuseppe Conte. US President Donald Trump showed no signs of backing down in his tussle with China, declaring on Tuesday that a confrontation was necessary even if it hurt the US economy in the short term. Shortly afterwards, the US government approved an $8bn sale of Lockheed Martin F-16 fighter jets to Taiwan, a move sure to draw Beijing’s ire and further dim prospects for a trade deal.

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