Major European markets showed a sluggish close on Wednesday. Investors were preoccupied with processing earnings updates, recent economic data from the region and anticipating the monetary policy decisions from the Federal Reserve and Bank of England. The Federal Reserve is likely to keep interest rates steady but any remark accompanying the decision could influence rate outlooks. Recently, the likelihood of a rate cut in March has waned, with many economists predicting a wait till May for rate reductions.
Optimism took a hit taking into account the dismal earnings updates from prominent technology companies in the U.S., such as Alphabet, AMD and Microsoft. The pan-European Stoxx 600 saw a decrease of 0.47% while DAX in Germany and CAC 40 in France declined 0.4% and 0.27% respectively. Swiss SMI also experienced a 0.96% decline.
Meanwhile, other European markets showed a mixed performance. Finland, Netherlands, Norway and Sweden performed weakly while Belgium, Denmark, Greece, Iceland, Ireland, Poland, Portugal, Russia, Spain and Turkey observed increases. Visitations in Austria remained stable.
In the UK, companies such as WPP, Marks & Spencer, M&G, B&M European Value Retail, Vodafone, Next, Smurfit Kappa Group, Rolls-Royce Holdings, Tesco, Airtel Africa, Prudential and Ashtead experienced falling rates between 1.6 to 3%. In contrast, Croda International leaped nearly 5% and companies like GlaxoSmithKline, Antofagasta, Severn Trent, St. James's Place, Barratt Developments, Entain, Smith & Nephew and Beazley enjoyed gains of 1 to 2%.
In Germany, companies like Bayer, Zalando, Adidas, Fresenius, Siemens, Infineon, HeidelbergCement, MTU Aero Engines and SAP faced losses between 1 to 2%. On the other hand, Volkswagen, Vonovia, Sartorius and Porsche enjoyed a 2 to 3% increase. BMW enjoyed a 1.8% increase while E.ON and Mercedes-Benz gained just over 1%.
In Paris, Airbus Group, Teleperformance, Thales, LVMH and Edenred suffered losses between 1 to 1.6%, while Stellantis, Renault, ArcelorMittal, Sanofi and Alstom enjoyed gains between 0.5 to 1.4%.
According to data from Destatis, import prices in Germany for December dropped by 8.5% from the previous year, a slightly slower rate than the 9% decline observed in November. Consumer price inflation in Germany softened more than expected in January, dropping to the lowest level in just over two and a half years. Unemployment in Germany surprisingly dropped in January, coming in at 5.8%.
In France, consumer price inflation hit a two-year low in January, slowing to 3.1% from 3.7% as per data from statistical office INSEE.
In the UK, data from Nationwide Building Society indicated an unexpected growth in house prices at the beginning of the year, with a 0.7% rise in January following a stagnant performance in December.
