Major European Markets Close Lower Again

(RTTNews) - Major European markets closed lower on Thursday amid uncertainty about the near term outlook for interest rates, and a mixed batch of regional and U.S. economic data. Investors also tracked quarterly earnings updates for direction.

The Bank of England opened the door for interest rate cuts this year after holding the policy rate steady for four straight meetings, and lowered its inflation projections.

The Federal Reserve, which decided to hold rates unchanged on Wednesday, said a rate cut in March is unlikely.

On the economic front, data showed British factory activity deteriorated in January. Euro area manufacturing downturn slowed, and Eurozone inflation weakened in the month of January.

The pan European Stoxx 600 ended down 0.37%. The U.K.'s FTSE 100 closed lower by 0.11%, Germany's DAX drifted down 0.26% and France's CAC 40 lost 0.89%, while Switzerland's SMI declined 1.05%.

Among other markets in Europe, Austria, Belgium, Finland, Ireland, Portugal and Spain ended higher.

Denmark, Greece, Netherlands, Poland, Russia, Sweden and Turkiye closed higher, while Iceland and Norway ended flat.

The BoE's Monetary Policy Committee, led by Governor Andrew Bailey, decided in a 6-3 split vote to keep the bank rate at a 15-year high of 5.25%, as expected.

The BoE dropped the wordings related to further tightening in the latest policy statement.

The risks to inflation were more balanced, the bank noted. Although services price inflation and wage growth dropped somewhat more than expected, key indicators of inflation persistence remained elevated, the majority in MPC said.

Inflation is forecast to fall temporarily to the 2% target in the second quarter before rising again in the third quarter and the fourth quarter. Price growth is projected to be 2.3% in two years' time and 1.9% in three years.

GDP is forecast to expand 0.1% in the first quarter of 2024 and at a similar pace over the coming few quarters.

Sweden's central bank left its key interest rate unchanged for a second straight session, as expected, and suggested that a rate cut would be possible in the first half of the year.

In the UK market, Ocado Group and 3i lost more than 5%. Associated British Foods, Fresenillo, Smurfit Kappa Group, BT, Natwest Group and Melrose Industries ended down 2 to 3%.

Land Securities, Next, Aviva, Marks & Spencer and Barclays Group lost nearly 2%. Segro, Tesco, Centrica, Prudential, Compass Group, Kingfisher, Scottish Mortgage and Anglo American also ended sharply lower.

Diploma and Croda International gained about 3%. Royal Dutch Shell climbed nearly 2.5% after full-year profit beat forecasts.

IMI, Entain, Haleon, RightMove, Beazley and GlaxoSmithKline gained 1 to 2%.

In the German market, Covestro ended 2.8% down. Adidas ended down more than 2% after operating profit guidance missed consensus estimate.

Zalando, Vonovia, Bayer, Merck, Brenntag, Volkswagen, RWE, Infineon, Allianz, MTU Aero Engines, Commerzbank and HeidelbergCement lost 1 to 2.3%.

Deutsche Bank gained about 2.7% after the lender lifted its revenue and payout targets and unveiled plans to cut 3,500 jobs

Siemens Healthineers rallied 3.7%, while Puma, Symrise, SAP and Daimler Truck Holding posted moderate gains.

In Paris, Dassault Systemes tanked more than 10%. BNP Paribas tumbled nearly 9% after reporting pre-tax income of 1.476 billion euros for the fourth quarter, lower than 2.790 billion euros a year ago.

Sanofi, Societe Generale, Teleperformance, WorldLine, Eurofins Scientific and Credit Agricole ended lower by 3 to 4.5%. Unibail Rodamco, AXA, Renault, Kering, Saint Gobain and Carrefour also ended notably lower.

Schneider Electric, Stellantis, Hermes International, TotalEnergies, Legrand, L'Oreal and Alstom gained 0.6 to 1.3%.

In economic releases today, survey results from S&P Global revealed that British factory activity deteriorated further at the start of the year amid the lower output and new orders as the Red Sea crisis badly impacted the supply chains. The Chartered Institute of Procurement & Supply Manufacturing Purchasing Managers' Index, or PMI, rose to 47.0 in January from 46.2 in December.

Final data from S&P Global showed the euro area manufacturing downturn slowed in January on softer decreases in factory output and new orders, with the HCOB manufacturing Purchasing Managers' Index coming in with a score of 46.6 from 44.4 in December. This was the highest reading in ten months.

Eurozone inflation weakened in January after accelerating in December. Flash data from Eurostat said the harmonized index of consumer prices rose 2.8% on a yearly basis, slightly slower than the 2.9% increase in December.

The euro area unemployment rate remained unchanged at a record low of 6.4% in December, data from Eurostat showed.