European stocks closed lower on Thursday as disappointing earnings reports overshadowed optimism regarding potential interest rate cuts, leading to a cautious market sentiment.
Data from the U.S. Labor Department revealed that consumer price inflation in April increased at a slower-than-expected pace, fueling hopes that the Federal Reserve might cut interest rates in September. Meanwhile, the European Central Bank is anticipated to begin reducing rates from a record high starting in June, with projections of up to three rate cuts within the year.
The pan-European Stoxx 600 index fell by 0.21%. The U.K.'s FTSE 100 dipped by 0.08%, while Germany's DAX and France's CAC 40 declined by 0.69% and 0.63%, respectively. Conversely, Switzerland's SMI saw a 0.4% increase.
Elsewhere in Europe, markets in Austria, Belgium, Greece, Ireland, Portugal, Spain, and Sweden ended in negative territory. Finland, Iceland, Norway, Poland, Russia, and Turkey closed higher, while Denmark and the Netherlands finished flat.
In the U.K., BT Group shares surged by over 17% following the new CEO's announcement of a strategy to more than double free cash flow over the next five years. Future Plc shares jumped 19% after announcing a share buyback program of up to £45 million ($57.1 million) and reporting a return to growth in the latest quarter. Burberry Group's stock rose by approximately 3.5%, while other gainers such as Prudential, Rio Tinto, Diploma, Phoenix Group Holdings, and Vodafone Group saw increases ranging from 1% to 3%.
However, Sage Group shares plummeted nearly 10% despite a strong first-half performance. EasyJet shares fell by 6% after reporting a larger-than-anticipated pre-tax loss of £350 million ($443 million) for the first half of the year. Convatec Group declined by 4.1%, and Kingfisher, Croda International, Pearson, Entain, and others experienced losses ranging from 1% to 3%.
In Germany, Siemens shares dropped by about 7% following a decline in second-quarter earnings for its industrial business. BMW, Sartorius, and Daimler Truck Holding fell by 5% to 6%, and HeidelbergCement, Infineon, Bayer, Brenntag, and Symrise dipped by 1.6% to 2.5%. Deutsche Bank, Covestro, BASF, and Siemens Energy also closed notably lower.
In France, stocks like Safran, Schneider Electric, TotalEnergies, Eurofins Scientific, Saint-Gobain, Bouygues, Michelin, Dassault Systemes, Accor, Edenred, and Stellantis experienced losses of 1% to 2%. However, ArcelorMittal climbed nearly 2%, with Kering, Thales, Publicis Groupe, Carrefour, Pernod Ricard, and Vivendi posting notable gains.
