European stocks concluded Thursday's session on a lower note, impacted by increased tensions in the Middle East and lingering uncertainties regarding China's economic growth despite recent stimulus efforts. Additionally, weaker Eurozone private sector data added to the investor unease.
Data from S&P Global revealed that the Eurozone's private sector contracted in September for the first time in seven months, with Germany, France, and Italy all recording contractions simultaneously for the first time this year. The final HCOB composite output index dropped to 49.6 in September from a three-month high of 51.0 in August, with the preliminary figure at 48.9.
The pan-European Stoxx 600 decreased by 0.93%. The UK's FTSE 100 slipped by 0.1%, Germany's DAX fell 0.78%, and France's CAC 40 declined 1.32%. Meanwhile, Switzerland's SMI was down by 0.91%.
Elsewhere in Europe, markets in Austria, Belgium, Denmark, Finland, Greece, Iceland, the Netherlands, Poland, Portugal, Sweden, and Turkey experienced moderate to sharp declines. Norway saw a slight dip, while Russia closed higher and Spain posted a marginal gain.
In the UK market, Phoenix Group Holdings fell by 5.7%, Diploma by 5.1%, and companies like M&G, Hargreaves Lansdown, Prudential, Antofagasta, GSK, Anglo American Plc, Spirax Sarco Engineering, Coca-Cola, National Grid, NatWest Group, and Weir Group saw losses ranging from 1% to 2.5%.
Conversely, Rolls-Royce Holdings advanced 2.81%. Tesco rose approximately 2.5% after increasing its annual profit outlook due to higher revenue and profit in the first half of the financial year. Companies like Shell, Scottish Mortgage, JD Sports Fashion, Persimmon, Barratt Developments, HSBC Holdings, Taylor Wimpey, Sainsbury, and Vistry Group posted gains of 1% to 1.8%.
In Germany, Continental shares fell more than 3%, while Infineon and Porsche decreased by around 2.8% and 2.5%, respectively. Other companies such as Beiersdorf, Bayer, Volkswagen, Qiagen, Vonovia, BMW, Fresenius Medical Care, Sartorius, Hannover Re, and Mercedes-Benz recorded losses between 1% and 1.7%.
SAP shares notably declined following a U.S. price-fixing investigation. Meanwhile, Daimler Truck Holding, Rheinmetall, Commerzbank, Siemens Energy, and BASF made strong gains.
In France, Stellantis dropped by 4.2% due to reduced output at all six of its factories in Italy during the first nine months. Bouygues ended 4.8% lower, and Orange fell 4%. Companies like Vinci, Publicis Groupe, Saint-Gobain, Kering, Air Liquide, STMicroelectronics, Renault, and Capgemini saw declines of 2% to 3%.
TotalEnergies gained approximately 1.5%, while Teleperformance climbed nearly 1%, and Accor closed with a modest increase.
In an interview with The Guardian, the Governor of the Bank of England (BoE), Andrew Bailey, indicated the central bank might take a more aggressive stance on interest rate cuts. Previously, the BoE had lowered its benchmark rate by a quarter-point in August, the first reduction since March 2020, in a 5-4 vote, bringing the rate to 5.00% from a 16-year high.
UK inflation has decreased from previous highs to 2.2%, slightly above the 2% target. Bailey suggested that further positive inflation developments could prompt the bank to take a more activist approach to rate cutting.
Meanwhile, Eurozone producer prices continued to decline in August due to decreasing energy costs, according to Eurostat. Producer prices fell 2.3% annually after a 2.2% decrease in July, slightly better than the forecasted 2.4% drop. Excluding energy, producer price inflation remained steady at 0.3% in August.
The UK's service sector activity continued growing in September, driven by increasing domestic demand, although the growth pace slowed since August. The S&P Global Services Purchasing Managers' Index decreased to 52.4 in September from 53.7 the previous month. New orders grew close to the 14-month peak seen in July, supported by lower borrowing costs and domestic economic stability.
Switzerland saw an unexpected easing in consumer price inflation in September, reaching the lowest level in over three years. The consumer price index increased by 0.8% year-on-year in September, down from a 1.1% rise in August, contrary to economists' expectations for inflation to remain stable at 1.1%.
