European Stocks Close Notably Lower On Hawkish Fed, Growth Concerns

(RTTNews) - European stocks closed notably lower on Thursday, with several markets falling to multi-week lows, as investors reacted to the policy announcements and views about economic outlook from the Federal Reserve and the Bank of England, in addition to digesting the latest batch of European and U.S. economic data.

The pan European Stoxx 600 closed down 1.51%. The U.K.'s FTSE 100 ended down 1.14%, Germany's DAX and France's CAC settled lower by 1.35% and 1.22%, respectively, while Switzerland's SMI tumbled 1.93%.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Iceland, Ireland, Netherlands, Norway, Spain, Sweden and Turkiye closed with sharp to moderate losses.

Russia ended higher, while Greece, Poland and Portugal closed flat.

The Bank of England decided to leave its benchmark rate unchanged as inflation is expected to continue rising and the economy is forecast to stagnate in the fourth quarter. The bank had reduced the rate by quarter-point each in November and August.

"A gradual approach to removing monetary policy restraint remained appropriate," the bank said. Bank staff expects GDP growth to have been weaker at the end of the year than projected earlier. The economy is forecast to post zero growth in the fourth quarter compared to 0.3% estimated in the November report.

In the near term, headline inflation was expected to continue to rise slightly. Inflation, wage growth and some indicators of inflation expectations increased, adding to the risk of inflation persistence, the bank said.

The Federal Reserve, which lowered interest rate by 25 basis points on Wednesday, signaled fewer interest rate cuts next year than earlier expected. The central bank's latest projections suggest rates will be in a range of 3.75 to 4% by the end of 2025 compared to the range of 3.25 to 3.5% forecast in September.

In the UK market, Pershing Square Holdings, Mondi, Ashtead Group, Marks & Spencer, British Land, Anglo American Plc, Antofagasta, Convatec Group, Informa, Airtel Africa, Experian, Halma, Fresnillo, Barclays Group, Glencore and Relx lost 2 to 4%.

Severn Trent advanced nearly 1%. Imperial Brands, Hikma Pharmaceuticals and Diageo posted modest gains.

In the German market, Infineon closed down nearly 5%. Vonovia, HeidelbergCement, Fresenius Medical Care, Siemens, Continental, Siemens Energy and Sartorius lost 2 to 3%.

Deutsche Bank, Fresenius, Merck, Adidas, Bayer, BASF, Siemens Healthineers, Zalando, Munich RE, SAP and Daimler Truck Holding closed down 1 to 2%.

Rheinmetall gained about 1%. Covestro ended moderately higher.

In the French market, STMicroElectronics closed down by about 6% after U.S.-based Micron Technology issued a disappointing quarterly forecast, citing weakening consumer demand.

Vivendi closed lower by 5.6%. Stellantis ended lower by about 3% after reporting a sales drop in November. Schneider Electric, Legrand, Unibail Rodamco and Saint-Gobain ended down 2 to 3%.

Renault retreated after early gains, and ended lower by about 1.1%. According to reports, Foxconn is in talks with Nissan Motor Co.'s biggest shareholder Renault about its willingness to sell its shares in the Japanese automaker.

ArcelorMittal, Dassault Systemes, BNP Paribas, Publicis Groupe, Essilor, Carrefour, Michelin, Safran, Edenred and LVMH also closed notably lower.

Capgemini, Thales, Eurofins Scientific and Pernod Ricard ended higher.

In economic news, the confidence among French manufacturers held steady in December after showing some recovery trends in the previous month, data from INSEE showed. The manufacturing sentiment index stood at 97 in December, the same as in November. Further, the index remained below its long-term average of 100. The expected score was 96.0.

German consumer confidence recovered marginally towards the end of the year and it is forecast to rise again in January, survey data jointly published by the market research group GfK and the Nuremberg Institute for Market Decisions showed. The forward-looking consumer sentiment index posted -21.3 in January, up from -23.1 in December. The score was expected to rise to -22.6.

The euro area current account surplus totaled EUR 26 billion in October, down from EUR 39 billion in the previous month. The surplus on goods trade decreased to EUR 30 billion from EUR 32 billion, while those on services remained stable at EUR 15 billion.Meanwhile, primary income turned to a deficit of EUR 5 billion from a surplus of EUR 5 billion in the previous month.

Switzerland's foreign trade surplus decreased notably in November as exports fell much faster than imports. The trade surplus decreased to CHF 4.0 billion in November from CHF 6.0 billion in October. In real terms, exports plunged 10.8% over the month, reversing an 11.4% decrease in October. Imports decreased 2.8%, which was the first fall in three months.

New car sales in the EU decreased in November after rebounding in the previous month.New car registrations dropped 1.9% year-over-year to 869,816 units in November, reversing a 1.1% rise in October. Among the four major markets, the French car market showed the biggest fall with 12.7%, followed by Italy, where sales were down by 10.8%.