European Stocks Close Lower On Growth Worries, Interest Rate Concerns

(RTTNews) - European stocks closed lower on Thursday with investors closely following the developments on the geopolitical front, and digesting the budget announcement by the British Finance Minister Jeremy Hunt.

A surge in Covid-19 cases in China, and hawkish comments from some Federal Reserve officials weighed as well on investor sentiment.

The pan European Stoxx 600 declined 0.42%. The U.K.'s FTSE 100 edged down 0.06% and France's CAC 40 shed 0.47%, while Germany's DAX climbed 0.23%. Switzerland's SMI ended 0.17% down.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden and Turkiye all ended weak.

UK Chancellor Jeremy Hunt today announced tax measures that would raise billions, spending cuts and cost of living support measures for households and businesses struggling with soaring energy bills as he confirmed the economy is in a recession.

Headline inflation rate is forecast to be 9.1% this year and 7.4% next year, Hunt said in his autumn statement, citing the latest projections from the Office for Budget Responsibility (OBR).

The OBR downgraded the UK growth projections from those in March, owing mainly to the surge in energy costs.

The UK economy is forecast to grow by 4.2% this year, while output is projected to fall 1.4% next year.

Thereafter, GDP is expected to rise 1.3% in 2024 and the growth rate is forecast to reach 2.7% in 2026.

Unemployment is expected to climb from 3.6% now to 4.9% in 2024 before falling to 4.1%.

In the UK market, Ocado Group tumbled 8.6%. Harbour Energy declined nearly 6%, Hargreaves Lansdown ended 4.8% down, and Halma closed lower by about 4.3%.

Spirax-Sarco Engineering shares drifted down 3% after the thermal energy and niche pumping specialist backed its full-year guidance for adjusted operating profit, excluding contributions from the recent acquisitions.

Antofagasta, Anglo American Plc, Smurfit Kappa Group, Endeavour Mining, Dechra Pharmaceuticals, Scottish Mortgage, GSK, Coca-Cola HBC and CRH also ended notably lower.

Centrica climbed nearly 5.5%. Lloyds Banking Group, Imperial Brands, Natwest Group, Legal & General, Burberry Group, British Land and 3I Group gained 2 to 3%.

In Paris, Bouygues plunged 7%. The French construction and media conglomerate confirmed its forecasts for sales and profitability in 2022 after reporting higher sales in the first nine months of the year.

However, net profit attributable to the group dropped to 537 million euros from 807 million euros last year.

Faurecia ended lower by about 3% and Michelin declined 2.4%, while Unibail Rodamco, Air Liquide, Valeo, Veolia, Vivendi, WorldLine, Thales and Teleperformance lost 1 to 2%.

Renault and Atos both gained nearly 2.5%. BNP Paribas and Societe Generale posted modest gains.

In the German market, HelloFresh drifted down more than 7%. Continental, Zalando, Merck, Puma, Daimler, HeidelbergCement, Vonovia, BASF and Fresenius Medical Care lost 1 to 4%.

Siemens surged 6.5% after the engineering and technology group said it expects higher margins from factory automation equipment and software products next year.

MTU Aero Engines rallied 4.2%, and RWE gained 1.8%. Symrise, Porsche Automobile and Volkswagen also ended notably higher.

Final data from Eurostat showed Euro area inflation accelerated further in October, albeit at a slightly slower than initially estimated pace.

Annual inflation rose to 10.6% in October from 9.9% in September. In the same month last year, prices had advanced only 4.1%.

Core inflation that excludes energy, food, alcohol & tobacco, increased to 5% from 4.8% a month ago. The year-on-year increase matched the estimate published on October 31.

Eurozone construction output expanded slightly after falling in the previous month, data from Eurostat showed. Construction output rose 0.1% month-over-month in September, reversing a revised 1% fall in August.

European stocks close lower on growth worries, interest rate concerns

European stocks closed lower on Thursday with investors closely following the developments on the geopolitical front, and digesting the budget announcement by the British Finance Minister Jeremy Hunt.

A surge in Covid-19 cases in China, and hawkish comments from some Federal Reserve officials weighed as well on investor sentiment.

The pan European Stoxx 600 declined 0.42%. The U.K.'s FTSE 100 edged down 0.06% and France's CAC 40 shed 0.47%, while Germany's DAX climbed 0.23%. Switzerland's SMI ended 0.17% down.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden and Turkiye all ended weak.

UK Chancellor Jeremy Hunt today announced tax measures that would raise billions, spending cuts and cost of living support measures for households and businesses struggling with soaring energy bills as he confirmed the economy is in a recession.

Headline inflation rate is forecast to be 9.1% this year and 7.4% next year, Hunt said in his autumn statement, citing the latest projections from the Office for Budget Responsibility (OBR).

The OBR downgraded the UK growth projections from those in March, owing mainly to the surge in energy costs.

The UK economy is forecast to grow by 4.2% this year, while output is projected to fall 1.4% next year.

Thereafter, GDP is expected to rise 1.3% in 2024 and the growth rate is forecast to reach 2.7% in 2026.

Unemployment is expected to climb from 3.6% now to 4.9% in 2024 before falling to 4.1%.

In the UK market, Ocado Group tumbled 8.6%. Harbour Energy declined nearly 6%, Hargreaves Lansdown ended 4.8% down, and Halma closed lower by about 4.3%.

Spirax-Sarco Engineering shares drifted down 3% after the thermal energy and niche pumping specialist backed its full-year guidance for adjusted operating profit, excluding contributions from the recent acquisitions.

Antofagasta, Anglo American Plc, Smurfit Kappa Group, Endeavour Mining, Dechra Pharmaceuticals, Scottish Mortgage, GSK, Coca-Cola HBC and CRH also ended notably lower.

Centrica climbed nearly 5.5%. Lloyds Banking Group, Imperial Brands, Natwest Group, Legal & General, Burberry Group, British Land and 3I Group gained 2 to 3%.

In Paris, Bouygues plunged 7%. The French construction and media conglomerate confirmed its forecasts for sales and profitability in 2022 after reporting higher sales in the first nine months of the year.

However, net profit attributable to the group dropped to 537 million euros from 807 million euros last year.

Faurecia ended lower by about 3% and Michelin declined 2.4%, while Unibail Rodamco, Air Liquide, Valeo, Veolia, Vivendi, WorldLine, Thales and Teleperformance lost 1 to 2%.

Renault and Atos both gained nearly 2.5%. BNP Paribas and Societe Generale posted modest gains.

In the German market, HelloFresh drifted down more than 7%. Continental, Zalando, Merck, Puma, Daimler, HeidelbergCement, Vonovia, BASF and Fresenius Medical Care lost 1 to 4%.

Siemens surged 6.5% after the engineering and technology group said it expects higher margins from factory automation equipment and software products next year.

MTU Aero Engines rallied 4.2%, and RWE gained 1.8%. Symrise, Porsche Automobile and Volkswagen also ended notably higher.

Final data from Eurostat showed Euro area inflation accelerated further in October, albeit at a slightly slower than initially estimated pace.

Annual inflation rose to 10.6% in October from 9.9% in September. In the same month last year, prices had advanced only 4.1%.

Core inflation that excludes energy, food, alcohol & tobacco, increased to 5% from 4.8% a month ago. The year-on-year increase matched the estimate published on October 31.

Eurozone construction output expanded slightly after falling in the previous month, data from Eurostat showed. Construction output rose 0.1% month-over-month in September, reversing a revised 1% fall in August.

Concerns about outlook for U.S. interest rates in the coming months weighed on sentiment.

San Francisco Federal Reserve President Mary Daly said on Wednesday that pausing rate hikes is off the table right now.

Federal Reserve Governor Christopher Waller said that he won't make a final decision on tightening before the release of jobs data and price consumption expenditures report.

In remarks at an event hosted by Greater Louisville Inc., St. Louis Fed President James Bullard suggested the central bank's aggressive interest rate hikes have had "only limited effects on observed inflation."

Bullard said the Fed will need to continue increasing interest rates to reach a level that could be considered "sufficiently restrictive."