European stocks closed lower on Tuesday as investors adopted a cautious approach, evaluating the potential positions of the Federal Reserve and the Bank of England on interest rates.
The pan-European Stoxx 600 declined by 0.6%. The U.K.'s FTSE 100 fell by 0.76%, Germany's DAX decreased by 0.52%, and France's CAC 40 dropped by 0.92%. Switzerland's SMI ended 0.89% lower.
Other European markets also exhibited weakness, including Austria, Belgium, Denmark, Finland, Greece, Iceland, the Netherlands, Poland, Portugal, Spain, and Sweden.
Conversely, Russia and Turkey saw gains, while Norway remained flat.
In the UK market, shares of Flutter Entertainment plummeted by over 7%. National Grid and Entain saw declines of 5.43% and 4.7%, respectively. Stocks such as Persimmon, Associated British Foods, Hikma Pharmaceuticals, Relx, Severn Trent, Intertek Group, Anglo American Plc, AstraZeneca, and Scottish Mortgage dropped by 2% to 3%.
Persimmon fell by about 3%, with reports indicating the company is interested in acquiring Cala Homes. United Utilities experienced a sharp decline, continuing its recent downtrend following a sewage spill in one of its water reserves.
Ocado Group surged nearly 10%, while JD Sports Fashion rallied almost 5.5%. ICG gained 3.2% after reporting impressive growth and revenue milestones for the year ending March 31, 2024.
In contrast, Fresnillo, Antofagasta, Legal & General, RS Group, Lloyds Banking Group, EasyJet, Rolls-Royce Holdings, Barclays Group, Smith (DS), Kingfisher, BT Group, and Glencore saw advances ranging from 1% to 3.2%.
In Germany, major decliners included Deutsche Boerse, Puma, MTU Aero Engines, Sartorius, SAP, Qiagen, Hannover Rueck, Bayer, Henkel, Beiersdorf, Rheinmetall, HeidelbergCement, and BASF, which fell between 1% and 2.5%.
However, Siemens Energy climbed nearly 4%, and Volkswagen rose by about 2.4%. Vonovia and Fresenius Medical Care also ended significantly higher.
In France, Carrefour tumbled about 7%, and Teleperformance decreased by 4%. Stocks such as Schneider Electric, Thales, Eurofins Scientific, Capgemini, Safran, Essilor, LVMH, Pernod Ricard, Sanofi, Dassault Systemes, and Air Liquide fell between 1% and 2%.
On the other hand, Renault surged over 2.5%, while Michelin, BNP Paribas, and Societe Generale also saw notable increases.
On the economic front, Germany's wholesale prices declined at a slower pace in April, as reported by Destatis. Wholesale prices dropped 1.8% year-on-year in April, following a 3% decline in March. The statistical office re-based wholesale selling prices to the new base year 2021.
In the UK, shop price inflation in May weakened to its lowest level since November 2021, as non-food prices continued to decline, according to data from the British Retail Consortium and NielsenIQ. The shop price index recorded a 0.6% annual increase in May, down from a 0.8% gain in April. This was the slowest growth since November 2021. Non-food prices declined by 0.8%, following a 0.6% drop. Concurrently, annual food inflation growth decelerated to 3.2% from 3.4% in April.
UK retail sales rebounded in May, and selling price inflation continued to ease, according to the Confederation of British Industry. The retail sales balance rose to +8%, up from -44% in April, based on the latest Distributive Trades Survey results.
In the Eurozone, consumers lowered their inflation expectations for the next 12 months and became less pessimistic about the economic outlook, though unemployment concerns persisted, as per a monthly survey by the European Central Bank. The median expected inflation rate for the next 12 months dropped to 2.9% from 3% in March, marking the lowest rate since September 2021. The ECB, aiming to maintain inflation at 2%, has signaled a potential interest rate cut in June.
