European Stocks Close Sharply Lower On Rate Hike Concerns

(RTTNews) - European stocks closed sharply lower on Thursday with some key indexes in the region falling to multi-month lows, as upbeat labor market data from the U.S. and the minutes from the Federal Reserve's June monetary policy meeting raising concerns about further hike in interest rates.

Concerns about the very slow pace of Chinese economic growth weighed as well.

The pan European Stoxx 600 ended 2.34% down. The U.K.'s FTSE 100 fell 2.17%, Germany's DAX lost 2.57% and France's CAC 40 tumbled 3.13%, while Switzerland's SMI ended lower by 1.85%.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Ireland, Netherlands, Norway, Portugal, Spain and Sweden closed sharply lower.

Iceland and Poland ended with modest losses,

Russia and Turkiye closed higher, while Czech Republic ended flat.

In the UK market, Glencore, Next, Antofagasta, Flutter Entertainment, JD Sports Fashion, Persimmon, IAG, Anglo American Plc and Kingfisher lost 4.2 to 5.5%.

Johnson Matthey, Rolls-Royce Holdings, ABRDN, Fresnillo, Ocado Group, Intertek Group and Barratt Developments were among the other major losers.

In the German market, Vonovia plunged more than 7%. Adidas ended lower by about 5.6%.

HeidelbergCement, MTU Aero Engines, Zalando, Deutsche Bank, Sartorius, Infineon, Fresenius, BMW, Bayer, Porsche, Fresenius Medical Care and Hannover Rueck shed 3 to 5%.

In Paris, Unibail Rodamco, ST MicroElectronics, Hermes International, Capgemini, BNP Paribas, Teleperformance, Alstom and TotalEnergies lost 4 to 5.6%.

LVMH, ArcelorMittal, Societe Generale, Safran, Air Liquide, Bouygues, Saint Gobain, WorldLine, L'Oreal, Kering, Renault and Credit Agricole ended lower by 3 to 3.7%.

In European economic news, Eurozone retail sales showed stagnation for the second straight month in May, data from Eurostat revealed. Retail sales remained unchanged on a monthly basis in May, the same as in April. In March, sales dropped 0.4%. Meanwhile, economists had forecast sales to rise by 0.2%.

Germany's factory orders rebounded in May driven by the manufacture of motor vehicles, data published by Destatis revealed.

Factory orders advanced 6.4% on a monthly basis in May, following a 0.2% rise in April. Orders were expected to grow 1.5% after April's initially estimated 0.4% drop.

Germany's construction sector declined at the fastest pace since February 2021 as higher interest rates and economic uncertainty weighed on demand, survey results published by S&P Global revealed on Thursday. The HCOB construction Purchasing Managers' Index posted 41.4 in June, down from May's 43.9.

The UK construction sector contracted for the first time in five months in June due to the downturn in housing activity, survey results from S&P Global showed on Thursday. The Chartered Institute of Procurement & Supply construction Purchasing Managers' Index slid to 48.9 in June from 51.6 in May. A score below 50.0 suggests contraction.

In U.S., payroll processor ADP released a report showing private sector employment spiked by 497,000 jobs in June after jumping by a downwardly revised 267,000 jobs in May. Economists had expected private sector employment to increase by 228,000 jobs compared to the addition of 278,000 jobs originally reported for the previous month.

While the surge in private sector employment paints a positive picture of the economy, continued strength in the labor market may convince the Federal Reserve to resume raising interest rates.

The Fed, which is due to announce its next interest rate decision later this month, has previously warned about the impact of labor market tightness.