European stocks concluded Wednesday with mixed results as investors considered U.S. consumer price inflation data and speculated on the Federal Reserve's potential interest rate cut next week.
Attention now turns to the European Central Bank's (ECB) monetary policy announcement on Thursday, with widespread expectations of it lowering interest rates for the second time this year.
The pan-European Stoxx 600 saw a marginal decline of 0.01%. The UK's FTSE 100 fell by 0.15%, and France's CAC 40 dropped 0.14%, while Germany's DAX rose by 0.35%. Switzerland's SMI ended with a 0.35% decline.
In other European markets, Austria, Belgium, Finland, Greece, Iceland, Poland, Russia, Sweden, and Turkiye performed weakly. Conversely, Denmark, the Netherlands, Norway, Portugal, and Spain closed higher.
In the UK market, Entain surged by more than 4%. ICG, Prudential, Endeavour Mining Plc, BT Group, Lloyds Banking Group, Next, Burberry Group, Rio Tinto, NatWest Group, Vodafone Group, Antofagasta, Melrose Industries, and Reckitt Benckiser saw gains ranging from 1% to 2.3%.
Rentokil Initial tumbled over 20% following a profit warning. Despite some positive momentum in North American sales at the end of the second quarter, the company reported disappointing performance in July and August. Additional branch integration disruptions led Rentokil to revise its North American organic revenue growth forecast for the second half of 2024 to approximately 1%.
Howden Joinery, Vistry Group, Mondi, Berkeley Group Holdings, Centrica, Ashtead Group, Coca-Cola, Diploma, Marks & Spencer, Persimmon, and Smith (DS) fell between 1% and 2%.
On the German front, Commerzbank shares soared nearly 17% after Italian banking giant UniCredit acquired a 9% stake and expressed intentions to seek approval for potentially increasing its shareholding.
BMW and Porsche experienced gains of 3% and 2.4%, respectively. Siemens Energy climbed nearly 2%, and Adidas gained about 1.8%. Infineon, Covestro, and SAP also closed notably higher.
Bayer ended over 2% down, with Deutsche Bank, Fresenius Medical Care, Puma, Zalando, and Vonovia falling by 1.2% to 2%.
In France, Dassault Systèmes rose by 2.25%, while Pernod Ricard, AXA, Legrand, Accor, BNP Paribas, Vivendi, and TotalEnergies also ended higher.
Edenred, L'Oreal, Unibail-Rodamco, Eurofins Scientific, Sanofi, LVMH, Saint-Gobain, and Stellantis registered notable to moderate losses.
In economic news, the UK economy unexpectedly stagnated in July due to declines in production and construction, offset by gains in services output, according to official data.
The Office for National Statistics reported zero growth in real gross domestic product for the second consecutive month, contrary to forecasts of a 0.2% increase. A 0.1% rise in services output was counterbalanced by a 0.8% decrease in production output and a 0.4% fall in construction output.
Over the three months to July, GDP grew by 0.5%, bolstered by strong service sector contributions. Services output rose by 0.6%, and construction grew by 1.2%, while production output dipped by 0.1%.
U.S. Labor Department data indicated the consumer price index rose by 0.2% in August, matching July's increase and aligning with economist expectations. However, core consumer prices, excluding food and energy, increased by 0.3% in August, up from 0.2% in July. Economists had anticipated a repeat of the 0.2% rise.
While the Federal Reserve is still likely to reduce interest rates next week, the larger-than-expected increase in core consumer prices reduces the likelihood of a 50-basis-point cut.
Following the report, CME Group's FedWatch Tool indicates an 83% probability of a quarter-point rate cut and a 17% chance of a half-point cut.
