European stocks higher after Fed chair signals more rate hikes possible

European shares traded higher on the final trading week of August, as traders weighed the prospect of higher interest rates from the U.S. Federal Reserve and looked ahead to upcoming economic data later in the week.

Germany’s DAX 30 was 0.8%, France’s CAC 40 climbed 1.1%, and the Italian FTSE MIB gained 1.1% by 1.40 p.m. London time.

Markets are closed in the U.K. for a public holiday.

It came as investors continued to reflect on a roundup of commentary from the Kansas City Federal Reserve’s annual retreat in Jackson Hole, Wyoming, last week.

The most closely watched speech of the event came from Fed Chair Jerome Powell. The U.S. central bank head said that inflation remains too high and that the Fed is ready to continue hiking interest rates to tame persistently high prices.

While Powell said the Fed could be flexible, he added it still has further to go to fight inflation. “Although inflation has moved down from its peak — a welcome development — it remains too high,” he said in prepared remarks.

“We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”

In Asia-Pacific, stocks began the week higher, with mainland Chinese and Hong Kong stocks leading gains in the region.

The main event driving the rally in Asia was a stock market policy change from the government. China’s Ministry of Finance on Monday cut the stamp duty on stock trades by half in an effort to boost investment in its stock market. It came after China’s CSI 300 index fell to a nine-month low.

Still, concerns linger among economists over structural issues in China’s economy, such as debt, demographics, and Beijing’s deteriorating relationship with the West.

Within the Chinese market, shares of the world’s most indebted property developer, China Evergrande Group, tumbled 87% as trade resumed after 17 months.

Back in Europe, developments are quiet on the corporate front as the region has wrapped up a busy earnings season.

Swiss bank Credit Suisse, which is now a subsidiary of UBS after a government-facilitated takeover, posted a 3.5 billion Swiss franc ($4 billion) loss, according to a report in the SonntagsZeitung citing insiders at the bank.

Shares of UBS rose about 1% Monday. The bank is set to report earnings on Thursday.

Technology and telecoms stocks were the best-performing sectors in the region, climbing 1.4% and 0.9%, respectively.

Looking at individual stocks, Italian telecoms firm Telecom Italia was the top performer on the Stoxx 600, rising 3.9%.

Later in the week, the U.S. Labor Department is set to release nonfarm payrolls showing the pace of jobs and wage growth, which could guide the Fed on how to proceed with its monetary policy.