On Friday, Western Europe's leading stock market indicators reported a decline. The week ended in the red zone as well. The day before, traders continued to evaluate the decisions of the European Central Bank, the Bank of England and the U.S. Federal Reserve on the key interest rate.
The pan-European Stoxx 600 fell by 0.8% to 426.33 points.
French CAC 40 fell by 1.08%, German DAX lost 0.67% and British FTSE 100 decreased by 1.27%. At the same time, at the end of the whole trading week, the British index decreased by 1.9%, the French one lost 3.4% and the German one decreased by 3.3%. The key reason for the persistent pessimism on the European markets was investors' fears about the prospects for the global economy.
Leaders of growth and decline
The share price of German biopharmaceutical company MorphoSys AG fell by 14.7%.
BT Group PLC, a British telecommunications company, dropped 0.4%. Earlier, the BT Group unveiled its plans to combine its Global and Enterprise units into a single B2B unit, called BT Business. A move that is excepted to deliver annualized cost savings of at least $121.8 million by the end of fiscal 2025.
The share price of British industrial and electronics distributor RS Group PLC fell 1.6% on news of the resignation of Chief Executive Lindsley Ruth.
Norwegian oil producer Aker BP fell 1%.
Market sentiment
On Friday, European traders continued to analyze the results of meetings of the world central banks. Thus, the ECB raised the main interest rate by 50 basis points to 2.5%. In addition, representatives of the ECB said they believe further rate hikes are necessary in order to achieve the inflation target of 2%.
The ECB expects inflation to fall from an average of 8.4% in 2022 to 6.3% in 2023. Inflation is then expected to fall to an average of 3.4% in 2024. At the beginning of autumn, analysts at the ECB estimated these figures at 8.1%, 5.5% and 2.3%, respectively.
According to the new forecast, annual average real GDP growth is expected to rise by 3.4% in 2022 against the previously assumed 3.1%.
Recall that during the ECB's October meeting, the central bank raised all three key interest rates by 75 basis points. At the same time, the indicator of the base interest rate on loans was increased to 2%, deposit rates up to 1.5%, and rates on margin loans up to 2.25%.
On Thursday, the BoE also increased its base rate by 50 basis points, to 3.5% from 3%. The Monetary Policy Committee announced it had raised interest rates for the ninth meeting in a row, thereby hitting their highest level for 14 years. In addition, representatives of the central bank said it intends to pursue a tactic of further rate hikes to combat record levels of inflation.
Regulator experts predict that in the fourth quarter of this year, the UK gross domestic product will fall by 0.1% after falling by 0.5% in the previous quarter.
As part of its November meeting, the BoE raised the rate by 75 basis points, the highest hike since 1989.
On Wednesday night, the Fed raised its interest rate by 50 basis points to 4.25%-4.5%. At the same time, the rate reached its highest level since 2007. In a comment on the results of the December meeting, Fed Chairman Jerome Powell said that the US central bank will stay on course to tighten monetary policy until inflation returns to the 2% target level.
The important event of the week was also the inflation data in the United States for November. According to the report of the U.S. Department of Labor, the consumer price index (CPI) went up 7.1% in November versus a year ago, down from 7.7% in October. Thus, inflation slowed to its lowest level since December 2021. At the same time, experts had forecasted an increase of 7.3%.
On Friday, Eurostat published its final estimate of annual inflation in the 19 countries of the euro region for the past month. The euro zone saw consumer prices slow down to 10.1% in November from 10.6% in October. At the same time, experts forecasted the figure at 10%.
Meanwhile, according to preliminary estimates of analysts, the S&P Global Eurozone Composite PMI increased to 48.8 in December of 2022 from 47.8 in November. Traditionally, the PMI value below 50 points signals the decline of business activity in the sector. By the way, in the euro area this indicator has remained below the 50-point mark for the fifth month in a row.
The S&P Global Germany Composite PMI edged higher to 48.9 in December of 2022 from 46.3 in November, while in France it fell to 48 points from 48.7 points.
According to the UK Office for National Statistics (ONS), retail sales fell by 0.4% last month compared to October. Analysts on average expected an increase of 0.3%.
Previous trading results
On Thursday the leading stock exchange indicators of Western Europe closed the trading session sharply lower.
The Stoxx Europe 600 fell by 2.85% to 429.91 points - the lowest mark in more than a month.
France's CAC 40 fell 3.09%, Germany's DAX lost 3.28% and Britain's FTSE 100 fell 0.93%.
The share price of the UK's biggest bank, HSBC, dropped 1.5%.
German car concern Volkswagen AG fell by 2.2%.
The share price of the French carmaker Renault S.A. dropped by 1.7%.
German automobile concern Mercedes-Benz Group AG fell by 3.8%.
Dutch car manufacturing corporation Stellantis NV fell by 2.5%.
Swedish clothing chain H&M collapsed by 6.85%. At the same time, the company said sales for the quarter ended Nov. 30 increased by 10% on year.
Swedish medical equipment manufacturer Getinge AB fell by 8%.
The share price of German online car sales platform Auto1 Group SE also sank by 8%.
Polish video game developer CD Projekt S.A. plummeted 8.9%.
The U.K. electrical retailer Currys dropped 4.8% after full year profit guidance lowered.
The share price of British American Tobacco, a maker of cigarettes, tobacco and nicotine products, rose 0.6% on news that the company will close its plant in Switzerland in 2023.
Swedish company Beijer Ref AB, which sells air conditioners, plummeted by 12%.
Dutch payment system operator Adyen N.V. fell 8.7%.
On Thursday, European investors also analyzed new data for the countries of the region. So, according to final data from France's Insee National Statistics Office, the country's annual inflation rate in November remained at October's level of 6.2%, while monthly inflation fell to 0.3% from 1% in October. At the same time the increase in prices for food made 12.1%, for energy - 18.4%, for industrial goods - 4.4% and for services - 3%.
No change to French business sentiment as we get into the final month of the year, staying just slightly above its long-term average of 100. At the same time, analysts predicted a drop in the indicator to 100 points.
According to the European Association of Automobile Manufacturers (ACEA), the EU new passenger car market reported another strong growth at 16.3%, the fourth in a row this year, to 829,527 units sold in November 2022. Last month's volume of sales still remains much lower than the pre-pandemic level.
