European stock markets experienced a general decline on Thursday following a survey that revealed the eurozone's private sector contracted for the first time in seven months as of September. The HCOB composite output index dropped to 49.6 in September from August's three-month peak of 51.0, which increased anticipation for a potential interest rate reduction at the European Central Bank's meeting scheduled for October 17.
In the United Kingdom, business activity growth fell to its lowest point in three months during September. Meanwhile, in France, President Emmanuel Macron advocated for a temporary tax on the nation's largest corporations as a means to realign public financial stability.
Concerns also mounted among investors regarding an escalation in Middle Eastern conflict after Iran launched its largest offensive to date. The pan-European STOXX 600 declined by 0.7% to 517.71, after ending Wednesday on a flat note with a slight positive trend. Germany’s DAX and France’s CAC 40 both decreased by 0.7% and 0.8% respectively, while the UK's FTSE 100 rose by 0.3%.
The British pound weakened amid reports that Bank of England Governor Andrew Bailey might consider a 'more aggressive' approach to cutting interest rates if positive inflation reports persist. In an extensive interview with the Guardian, Bailey suggested that the Bank might become "a bit more aggressive" when implementing interest rate cuts.
In corporate developments, Ericsson's shares fell about 1% following reports that the telecom supplier is contemplating relocating from Kista. In contrast, Telecom Italia saw a 2.3% rise as Italy put forward a new offer for its Sparkle submarine cable division. Stellantis NV shares plummeted 4.2% following a decrease in production across all six of its Italian plants in the first nine months of the year.
British Land Company’s shares dipped by 0.7% in London after the property firm disclosed its acquisition of a portfolio of seven retail parks for £441 million. Tesco saw a 3.1% increase after the supermarket group raised its annual profit forecast, buoyed by profit and revenue growth in the first half of the financial year. Telecom Plus gained 0.7%, reporting sustained strong growth in customer numbers during its first-half performance update.
In France, Alstom rose by 2.2% after receiving an order for 12 Avelia Horizon very high-speed trains from Proxima. However, German software giant SAP SE fell 1.3% following a U.S. price-fixing investigation concerning the company. Lufthansa's stocks remained stable, though the carrier announced the resumption of certain Middle Eastern flights while avoiding Iranian and Iraqi airspace as a safety precaution amid ongoing conflict.
LANXESS shares tumbled almost 3% as the specialty chemicals firm signed an agreement to sell its Urethane Systems division to Japan’s UBE Corporation. Residential landlord Vonovia fell 1.6% after announcing that it anticipates a liquidity inflow of around 4 billion euros for 2024, consistent with the previous year’s total.
