European Stocks Close Broadly Lower After ECB Raises Rates And Hints Another Hike

(RTTNews) - European stocks closed broadly lower on Thursday after the European Central Bank raised rates by 25 basis points and signaled another hike in July.

The ECB lowered the growth projections for the euro area and revised up their projections for core inflation.

Hawkish remarks from the Federal Reserve, hinting at further monetary tightening later this year hurt as well.

The pan European Stoxx 600 edged down 0.13%. France's CAC 40 shed 0.51%, Germany's DAX ended 0.13% down, and the U.K.'s FTSE 100 climbed 0.34%. Switzerland's SMI gained 0.22%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Finland, Greece and Norway ended weak.

Denmark, Netherlands, Poland, Portugal, Russia and Turkiye closed higher, while Iceland, Ireland, Spain and Sweden settled flat.

The ECB raised the three key interest rates by a quarter basis points today, in line with expectations, as policymakers assessed that despite some slowing, inflation is likely to remain "too high for too long" and economists' are looking forward to one more hike in July.

The Governing Council, led by ECB President Christine Lagarde, increased the main refinancing rate, or refi, by 25 basis points at 4%. The previous change in the interest rates was a similar hike in May. The ECB has raised rates in every policy session since July last year, by a cumulative 350 basis points.

Core inflation, excluding energy and food, is now projected to reach 5.1% in 2023, before easing to 3% next year, and further down to 2.3% in 2025.

Eurozone economy is now projected to grow by 0.9% this year, 1.5% next year and 1.6% in 2025.

In the UK market, Polymetal International rallied more than 4%. Informa surged nearly 3.5%. Royal Mail gained 2.75%, while Reckitt Benckiser, TUI, AstraZeneca, Relx, Vodafone, Unilever, Standard Chartered and Hikma Pharmaceuticals closed higher by 1.3 to 2%.

Intermediate Capital tumbled more than 6%. Natwest Group and Halma both ended lower by nearly 3.5%.

Smurfit Kappa, Legal & General, Barclays, Melrose Industries, Johnson Matthey, Admiral, BT, Pennon, Centrica and Ds Smith lost 1 to 2.6%.

In the German market, Deutsche Bank, Siemens Energy, Zalando, Porsche, Merck, Vonovia and Puma lost 2 to 3%.

Brenntag, HeidelbergCement, Volkswagen, E.On, BASF and Commerzbank also ended notably lower.

Symrise surged 2.6%. Sartorius, Deutsche Boerse, Deutsche Post, Deutsche Telekom and Siemens also posted notable gains.

In Paris, Alstom declined 2.7%. BNP Paribas, Societe Generale, WorldLine, ArcelorMittal, STMicroElectronics, Credit Agricole, Kering, Capgemini, Michelin and Carrefour lost 1 to 2.1%.

Renault ended stronger by about 2.7%. Danone gained 1.3%, while Bouygues, Orange and Air Liquide ended modestly higher.

The euro area trade balance posted a shortfall in April due to the fall in exports amid rising imports, data released by Eurostat showed.

The trade deficit totaled EUR 7.1 billion in April compared to a surplus of EUR 14.0 billion in March.

Data showed that exports decreased 3.2% from March, while imports registered an increase of 5.9%. On a yearly basis, exports decreased 3.6% from the last year. At the same time, imports registered a bigger fall of 11.9%.

Switzerland's economy is expected to log significantly below-average growth though the year started vigorously, the State Secretariat for Economic Affairs, or SECO, said. The expert group of SECO forecast gross domestic product to grow 1.1% this year, unchanged from the previous projection. Likewise, growth outlook for 2024 was maintained at 1.5%.