On Thursday's trading, key European stock indices are declining in anticipation of the outcome of the European Central Bank meeting.
At the time of writing, the STOXX Europe 600 index of Europe's leading companies sank by 0.4% to 420.84 points.
Meanwhile, the British FTSE 100 declined by 0.32% to 7,247 points, the French CAC 40 lost 0.15% and reached 6,175.17 points, the German DAX dropped by 0.364% to 13,240.02 points.
Top gainers and losers
The shares of German producer of software for the management of business processes SAP SE fell by 3.9%. At the end of the second quarter of this fiscal year, the company's operating profit decreased more than analysts had forecasted. Moreover, the German producer lowered its profit forecast for 2022 the day before due to the hostilities between Ukraine and Russia.
The shares of Swiss robotics company ABB rose by 0.5% after the report of a sharp increase in orders in the second quarter, despite supply chain restrictions due to strict anti-pandemic measures in China.
At the time of writing, shares of Finnish telecommunications equipment maker Nokia Corp. soared by 6.9%. The day before, the company reported net profit above market forecasts in April-June 2022.
The market capitalization of Swiss pharmaceutical company Roche Holding AG fell by 0.6%. According to the company's strong corporate report, its quarterly net profit rose by 9%. However, this fact did not improve the situation.
The shares of French defense technology group Thales went down 1.8%. Earlier, the company's management announced that its aerospace division might incur losses of 70 million euros in 2022 amid the suspension of business in Russia.
Market sentiment
On Thursday, the European investors focused on the publication of the outcome of the European Central Bank's meeting. Many economists expected the ECB to raise interest rates for the first time since 2011. According to analysts, the regulator can raise it by 25 or 50 basis points. The results of the regulator's meeting were announced on Thursday.
These assumptions were based on the June inflation data in the EU countries. Notably, according to the EU Statistical Office, consumer prices in the EU member states rose by 8.6% year-on-year in June. Moreover, the figure was the highest since the start of data calculation. Currently, the inflation rate in the EU countries exceeds the ECB target of 2% more than four times.
Besides, the ECB announced a new anti-fragmentation tool yesterday. It was a bond-buying option designed to curb fluctuations in the debt market as borrowing costs fall.
On Thursday, European investors focused their attention on the key indicator of the Italian stock market FTSE MIB, which had collapsed by 2.7% by the time of writing.
Analysts believe the resignation of Italian Prime Minister Mario Draghi became the main catalyst for the sharp fall of the stock index into the red zone.
On Thursday, the major upward factor for Europe's stock market was the resumption of Russian gas supplies to Europe via its largest pipeline Nord Stream following a 10-day maintenance shutdown.
Although it will take time to restore gas flow to the required level, the resumption of Nord Stream has eased investor fears about the prospects of Europe's energy crisis.
Previous trading results
On Wednesday, European stock indices dropped ahead of the upcoming ECB meeting. The day before, investors also evaluated the corporate reports of the largest companies in the euro area.
Consequently, the STOXX Europe 600 index of Europe's leading companies sank by 0.21% to 422.51 points.
The British FTSE 100 was down 0.44% to 7,264.31 points, the French CAC 40 lost 0.27% to 6,184.66 points and the German DAX fell by 0.2% to 13,281.98 points.
Market capitalization of Dutch semiconductor equipment manufacturer ASML Holding NV had soared by 3.4% the day before. Although the company increased its revenue and net profit in the second quarter, its managers downgraded their forecast for revenue growth to 10% from 20% to the end of 2022. Moreover, the management of ASML Holding NV warned of the prospect of lower supply revenue and rising costs.
Shares of UK mail and parcel delivery service Royal Mail Plc gained 0.2% on Wednesday after falling sharply by 5% in the beginning of the trading session. Earlier, the company reported an 11.5% drop in revenue in its first fiscal quarter due to a decline in online purchases amid record inflation.
The day before, Royal Mail announced that it was considering splitting up Royal Mail and GLS if Royal Mail's performance in the UK would not improve soon.
Earlier, UK data on annual inflation became a key downward factor for European stock exchanges. According to the National Statistics Office (ONS), at the end of June, annual inflation accelerated to 9.4% from 9.1% in May. This figure has not been recorded since 1982. On average, economists predicted an increase to only 9.3%.
Experts at ONS believe rising food and energy prices are the major catalyst for growing inflationary pressures in the UK.
The current situation provokes investors' concern about interest rates' possible large increase by the Bank of England in the near future. Many analysts speculate that the regulator will raise the prime rate by 50 basis points at the next meeting. The nearest meeting of the British Central Bank is scheduled for early August.
Moreover, Governor of the Bank of England Andrew Bailey stated that it was necessary to take drastic measures. During his speech, Bailey said that reducing inflation in the country to the target of 2% is the absolute priority for the central bank.
