European stocks predominantly traded in negative territory on Wednesday, with a few markets managing to eke out gains, as prevailing geopolitical concerns and apprehensions about Chinese demand kept investor sentiment cautious and negatively biased.
Market participants processed regional inflation figures and anticipated the European Central Bank's upcoming rate-setting meeting for further direction. Concerns over Chinese demand and the potential inflationary consequences of a possible return of Donald Trump to the White House further weighed on market dynamics.
Semiconductor stocks experienced a downturn following a Bloomberg report that the Biden administration is contemplating stricter trade regulations targeting Chinese firms as part of its ongoing chip trade restrictions.
The pan-European Stoxx 600 concluded the day down by 0.48%. Germany's DAX and France's CAC 40 declined by 0.44% and 0.12%, respectively. Conversely, the U.K.'s FTSE 100 rose by 0.28%, and Switzerland's SMI increased by 0.6%.
Elsewhere in Europe, markets in Austria, Denmark, Greece, Netherlands, Poland, Portugal, and Sweden closed weaker. Positive performances were noted in Belgium, Finland, Iceland, Norway, Russia, and Spain, while the Turkish market finished flat.
In the U.K. market, Burberry Group surged 4.4%. Smith & Nephew, BT Group, Severn Trent, Reckitt Benckiser, GSK, Vodafone Group, Imperial Brands, United Utilities, and Coca-Cola saw gains ranging from 1.5% to 2.5%.
Beazley, Barclays, Standard Chartered, BP, British American Tobacco, Convatec, Croda International, AstraZeneca, and Unilever also recorded significant upticks.
Conversely, Antofagasta dropped over 6%, following a warning that its annual production would hit the lower end of guidance. Intermediate Capital Group fell 4.7%, with notable declines also seen in Melrose Industries, Scottish Mortgage, Frasers Group, Rolls-Royce Holdings, Halma, Intertek Group, Weir Group, Relx, Experian, BAE Systems, and Anglo American Plc, which lost between 1.4% and 3.3%.
In Germany, BASF, Bayer, Puma, and Adidas gained 2% to 3%, with Adidas upgrading its full-year guidance after an 11% revenue increase in the second quarter of FY24. Other gainers included Brenntag, Fresenius, E.ON, Sartorius, Henkel, Deutsche Telekom, BMW, Beiersdorf, and Deutsche Bank, up by 1% to 1.8%.
Rheinmetall fell 5.5%, with Siemens Energy down about 4.4%. SAP, Siemens, Zalando, Daimler Truck Holding, and Symrise ended lower, falling between 1.3% and 2%.
In France, Carrefour rose nearly 2%, with gains also seen in Eurofins Scientific, Air Liquide, Societe Generale, Total Energies, Stellantis, Edenred, L'Oreal, Kering, and ArcelorMittal. Pernod Ricard climbed 3.4% after announcing a deal to sell its international wine brands to Australian Wine Holdco Limited.
Essilor saw a decline of over 4%. Legrand, Schneider Electric, Accor, Publicis Groupe, Thales, Renault, Michelin, and STMicroelectronics recorded losses from 0.6% to 2%.
Elsewhere, Dutch semiconductor firm ASML Holding plummeted 11% on concerns over additional export restrictions to China. Danish hearing aid company Demant plummeted 14.8% after issuing a profit warning.
On the economic front, Eurozone consumer price inflation was finalized at 2.5% year-on-year in June, a slight decrease from May's 2.6%, and significantly lower than the 5.5% recorded a year earlier.
In the U.K., inflation remained stable at the official yearly target of 2% in June, unchanged from May, according to the Office for National Statistics. This stability, particularly in services inflation, reduced the likelihood of an interest rate cut in August. While headline inflation was anticipated to decline to 1.9%, the steadiness of services inflation at 5.7% diminished these prospects further.
