European stock markets ended lower on Wednesday, influenced by ongoing concerns about the Ukraine-Russia conflict, which led to a cautious investor sentiment. Although the session began with robust buying activity, investors decided to reduce their exposure as the day advanced.
In geopolitical developments, the U.S. Embassy in Kyiv announced it would remain closed on Wednesday following a warning about a possible significant Russian air attack on Kyiv. This precaution followed Russia's vow to retaliate against President Joe Biden's decision to allow Ukraine to target locations within Russia using U.S.-made missiles, a measure that has provoked a stern response from the Kremlin. Additionally, following repeated overnight air raid warnings in Kyiv, the Greek and Spanish embassies have also ceased public operations.
The pan-European Stoxx 600 index experienced a marginal decline of 0.02%. The FTSE 100 in the U.K. fell by 0.17%, Germany's DAX decreased by 0.29%, and France's CAC 40 dropped by 0.43%. Switzerland's SMI had a slight decline of 0.02%.
Elsewhere in Europe, market performance was mixed. Notable declines were seen in the Netherlands, Russia, Sweden, and Turkiye with significant losses, whereas Austria, Iceland, and Portugal experienced smaller declines. However, Belgium, Denmark, Greece, Ireland, Norway, and Poland saw gains, while Spain remained unchanged.
In the U.K. market, Vistry Group shares fell by 4.6%, with B&M European Value Retail seeing a similar decline. Shares of Convatec Group and Admiral Group decreased by around 4.1% and 4%, respectively. Companies like JD Sports Fashion, Berkeley Group Holdings, Persimmon, Howden Joinery, Airtel Africa, Segro, Marks & Spencer, Taylor Wimpey, and Melrose Industries faced losses ranging from 2.1% to 3.3%.
Noteworthy gains were seen by Sage Group, whose shares surged nearly 18% after reporting strong annual results and initiating a share buyback program. Severn Trent’s shares rose by about 1.4% subsequent to a notable recovery in interim profits. Imperial Brands increased by 1.6%, and Anglo American Plc, Prudential, NatWest Group, Barclays Group, and IAG also recorded noteworthy gains.
In Germany, Porsche stocks dropped almost 4%, with Bayer declining by 2.7%. Other companies like Mercedes-Benz, Fresenius, Commerzbank, Fresenius Medical Care, Sartorius, Rheinmetall, RWE, Volkswagen, Puma, BASF, and Symrise experienced losses ranging from 1% to 2%. However, Brenntag saw a rally of over 2%, while Siemens Healthineers, SAP, Zalando, and Qiagen demonstrated modest growth.
Paris markets saw Renault's shares dip by around 2.5%. Declines were also seen in Capgemini, BNP Paribas, Stellantis, Thales, STMicroElectronics, Saint Gobain, and Pernod Ricard, each losing between 1% and 2%. Conversely, Edenred rose by approximately 2.5% following a rating upgrade, while Societe Generale increased by 1.6%. Companies like Unibail Rodamco, Dassault Systemes, Kering, and Eurofins Scientific exhibited modest gains.
On the economic scene, UK inflation increased more than anticipated in October, diminishing the likelihood of a rate cut in the upcoming December monetary policy meeting. According to the Office for National Statistics, the Consumer Price Index increased by 2.3% annually, up from a 1.7% rise in September, which marked the lowest point since April 2021. This rise surpassed the Bank of England's 2% target and exceeded economists' expectations of 2.2%. Core inflation unexpectedly climbed to 3.3% from 3.2% in September, with forecasts predicting a level of 3.1%.
In Germany, producer prices decreased by 1.1% year-over-year in October, following a 1.4% decline the previous month, as per data from Destatis. Month-over-month, producer prices saw a rebound of 0.2% in October after a 0.5% dip in September. According to Eurostat, construction output in the Eurozone fell by 0.1% monthly following a stable August, with an annual decline in construction output easing to 1.6% from a previous 2.5% drop.
