### European Stocks Close Lower Amid Fading Fed Rate Cut Euphoria
European equities ended the week on a downbeat note as initial enthusiasm over the Federal Reserve's significant interest-rate cut began to wane. Investors turned their attention to recent economic data and geopolitical developments.
### Sector Performance
Automobile stocks experienced a sharp decline, and shares of luxury goods manufacturers also traded lower.
### Market Indices
The pan-European Stoxx 600 dropped by 1.42%. The U.K.'s FTSE 100 fell by 1.19%, while Germany's DAX and France's CAC 40 lost 1.49% and 1.51%, respectively. Switzerland's SMI closed down 1.03%.
Other European markets, including Austria, Belgium, Denmark, Finland, Netherlands, Poland, and Turkey, registered sharp to moderate losses.
Greece, Iceland, Norway, Spain, and Sweden saw modest declines. Portugal edged down slightly, while Russia closed higher.
### Stock Highlights
#### United Kingdom
In the UK market, notable declines came from Spirax Group, Frasers Group, Next, Melrose Industries, Antofagasta, Croda International, Prudential, Smith (DS), DCC, Mondi, Anglo American Plc, IMI, Hikma Pharmaceuticals, and Rightmove, all losing between 3% and 5%.
Burberry Group experienced a sharp drop following a rating downgrade by Jefferies.
On the positive side, National Grid rose approximately 1.3%. Rolls-Royce Holdings, Hargreaves Lansdown, and Phoenix Group Holdings saw marginal gains.
#### Germany
In Germany, Mercedes-Benz plummeted nearly 7%, burdened by a downward revision to its annual financial forecast due to weakening business in China.
Stocks including Sartorius, Puma, Brenntag, Infineon, Merck, and Porsche fell between 5.4% and 7%. Adidas and Deutsche Post ended down by 4.3% and 4.1%, respectively.
Other significant declines were seen in Siemens Healthineers, BMW, Volkswagen, Continental, Daimler Truck Holding, Qiagen, Fresenius Medical Care, Siemens, and Fresenius.
Meanwhile, Deutsche Boerse, MTU Aero Engines, Siemens Energy, Zalando, E.ON, and Commerzbank closed on a firm note.
#### France
In Paris, companies such as STMicroelectronics, Edenred, Eurofins Scientific, Capgemini, LVMH, Teleperformance, Stellantis, Kering, Hermès International, Renault, Essilor, L'Oreal, Airbus, ArcelorMittal, Vivendi, and Saint-Gobain saw declines ranging from 1.3% to 5%.
In contrast, Engie, Safran, Orange, Credit Agricole, and Unibail-Rodamco closed higher.
### Economic Data
#### Germany
Germany's producer prices registered an annual decrease of 0.8% in August, consistent with July's figure, according to data from Destatis. The anticipated decline was 1%. Prices have been falling since July 2023, largely due to a 4.6% year-over-year drop in energy prices, influenced mainly by lower natural gas and electricity costs.
On a month-to-month basis, producer prices rose slightly by 0.2% in August, against expectations for a flat performance.
#### France
In France, confidence among manufacturers remained steady in September following an uptick in the previous month. Data from the statistical office INSEE revealed that the manufacturing sentiment index stood at 99.0, matching August's figure and staying just below the long-term average of 100, which was in line with market expectations.
#### United Kingdom
In the UK, retail sales grew more than expected in August, driven by warmer weather boosting food and clothing sales, as reported by the Office for National Statistics. Retail sales increased by 1% on a monthly basis in August, following a 0.7% rise in July. The forecast was for a moderate 0.3% growth.
Separate data indicated that UK government borrowing exceeded official estimates, with debt reaching 100% of GDP at the end of August. Public sector net borrowing rose by GBP 3.3 billion from the prior year to GBP 13.7 billion in August, marking the third-highest borrowing figure for August since 1993.
