European stocks concluded Thursday with notable declines, driven by apprehensions that the Federal Reserve may limit interest rate cuts to just one this year, despite soft data on both consumer and producer price inflation.
The Federal Reserve maintained steady interest rates but issued a cautionary note that inflation remains too high to consider lowering policy rates currently.
In closer proximity, European Central Bank Governing Council member Joachim Nagel highlighted persistent consumer price growth in the eurozone, indicating that borrowing costs would not be automatically reduced. Furthermore, Governing Council Madis Muller is set to deliver a speech later in the session.
Data released today by Eurostat revealed a 0.1% decline in industrial output within the eurozone in April, compared to the previous month. Concurrently, the German Federal Statistical Office (Destatis) reported a continued decline in wholesale prices in May, albeit at a diminished rate compared to April. Specifically, wholesale prices decreased by 0.7% annually in May, an improvement from the 1.8% reduction observed in April.
The pan-European Stoxx 600 index fell by 1.31%, while the U.K.'s FTSE 100 dropped 0.63%. Germany's DAX and France's CAC 40 suffered more significant declines, falling 1.96% and 1.99%, respectively. Switzerland's SMI closed down by 0.59%.
Other European markets including Austria, Belgium, Denmark, Finland, Greece, Netherlands, Norway, Poland, Portugal, Spain, and Sweden also ended the day with notable losses. Conversely, Iceland and Russia experienced marginal declines, whereas Turkiye closed on a higher note.
Automaker stocks such as BMW, Renault, Mercedes-Benz, and Volkswagen tumbled following the European Union's announcement of increased tariffs on electric vehicles imported from China, potentially sparking trade tensions.
In the UK market, Intermediate Capital Group fell 5.36%, and Ashtead Group decreased by 4.6%. Shares of Persimmon, RS Group, Land Securities, Kingfisher, Fresnillo, Croda International, Berkeley Group Holdings, Legal & General, Entain, WPP, RightMove, Prudential, Schroders, Rentokil Initial, Smith (DS), Airtel Africa, and IMI declined between 2% and 4%.
Halma surged by nearly 13.5% following the release of robust annual results from the health and safety device maker. BT Group shares rose by 4.3% in response to Carlos Slim, Latin America's wealthiest individual, acquiring a 3.2% stake in the broadband and mobile operator. Severn Trent also climbed 4.2%, while United Utilities, Haleon, Reckitt Benckiser, Sainsbury (J), Ocado Group, and Anglo American Plc posted moderate to significant gains.
In the German market, Siemens, Zalando, Continental, Volkswagen, Fresenius Medical Care, Deutsche Bank, Daimler Truck Holding, Porsche, Covestro, Siemens Energy, HeidelbergCement, Commerzbank, BMW, and Merck saw declines ranging from 2% to 4.1%. Mercedes-Benz, Puma, Infineon, Bayer, BASF, SAP, and Brenntag also registered substantial losses.
The French market experienced declines among major stocks including AXA, Eurofins Scientific, Edenred, Air Liquide, Saint Gobain, Dassault Systemes, BNP Paribas, Schneider Electric, Capgemini, Engie, Stellantis, Vinci, Safran, TotalEnergies, Credit Agricole, and STMicroElectronics, with losses between 2% and 4.6%.
Following subdued consumer price inflation data yesterday, the U.S. Labor Department released a report today indicating a modest decrease in producer prices for May. The producer price index for final demand dipped by 0.2% in May, following a 0.5% increase in April. Economists had anticipated a slight 0.1% rise in producer prices. Additionally, the annual growth rate of producer prices slowed to 2.2% in May from an upwardly revised 2.3% in April, while expectations were for an acceleration to 2.5%.
