European markets ended on a downbeat note on Tuesday, led by declines in the energy sector as oil prices fell sharply. Investors processed a range of economic data from across the continent and turned their attention to the upcoming monetary policy statement from the European Central Bank later in the week. Tensions in the Middle East also dampened market sentiment.
The pan-European Stoxx 600 index dropped by 0.8%. In individual country performances, the UK's FTSE 100 slipped by 0.52%, Germany's DAX declined by 0.11%, and France's CAC 40 decreased by 1.05%, while Switzerland's SMI fell by 0.33%.
Additional European markets, including those of Austria, Denmark, Finland, Iceland, the Netherlands, Norway, Poland, Portugal, and Sweden, closed on weaker notes. In contrast, markets in Belgium, Greece, Ireland, Russia, Spain, and Türkiye saw gains.
In the UK, shares of Antofagasta, Glencore, BP, Spirax-Sarco Engineering, Croda International, Entain, Anglo American, Shell, Mondi, and Prudential fell between 3% and 5%. Scottish Mortgage Investment Trust, Standard Chartered, Melrose Industries, Rio Tinto, Halma, Intermediate Capital Group, Centrica, Rentokil Initial, and HSBC Holdings also reported notable declines.
Conversely, IAG saw an increase exceeding 4%, while Persimmon rose by 3.8%. Other gainers included EasyJet, Barratt Developments, JD Sports Fashion, Taylor Wimpey, United Utilities, Hikma Pharmaceuticals, Relx, Convatec Group, Beazley, Berkeley Group Holdings, SSE, British Land, Hiscox, Severn Trent, Admiral Group, and Marks & Spencer.
In Germany, Siemens Energy's shares decreased about 4%. Deutsche Bank fell by 2.6% following reports of a 16 million share sale priced at €16.01 ($17.43) each. Companies such as Porsche, Infineon, Continental, Sartorius, Beiersdorf, BASF, Siemens, BMW, HeidelbergCement, and Siemens Healthineers saw losses between 1% and 2%. However, Puma surged by more than 5%, and MTU Aero Engines climbed nearly 5%. Deutsche Telekom, E.ON, Bayer, Qiagen, Adidas, Vonovia, and Munich RE rose by 1% to 2%.
In France, TotalEnergies dropped by 4.8% after the company warned of a significant drop in its third-quarter downstream earnings due to reduced refining margins. Other French stocks such as L'Oreal, Dassault Systems, STMicroElectronics, ArcelorMittal, LVMH, Hermes International, Michelin, Schneider Electric, and Legrand fell between 1% and 4%. Meanwhile, Teleperformance gained around 2.5%, and firms like Unibail-Rodamco, Carrefour, BNP Paribas, AXA, Engie, Credit Agricole, and Bouygues closed noticeably higher.
Swedish telecom giant LM Ericsson soared 10.8% after reporting a profitable third quarter against a loss during the same period last year.
Economically, Eurozone industrial production rebounded in August, primarily due to a recovery in capital goods and durable consumer goods manufacturing, as highlighted by Eurostat. Industrial output increased by 1.8% month-over-month in August, reversing the 0.5% decline seen in July, aligning with expectations.
France's consumer inflation eased more than initially predicted in September, marking its lowest rate in over three years amid declining energy prices. The consumer price index rose by 1.1% year-on-year in September, slowing from the 1.8% increase in August. The preliminary estimate had placed inflation at 1.2%.
Germany's wholesale prices continued their downward trajectory in September at the steepest rate in five months, falling by 1.6% year-on-year, larger than August's 1.1% decline. This marked the fifth consecutive month of declining wholesale prices, driven by a 14.6% decrease in mineral oil products.
For the first time in four months, German economic sentiment improved in October, buoyed by expectations of further interest rate cuts amid decelerating inflation, as revealed by the ZEW economic research institute. The ZEW Indicator of Economic Sentiment rose to 13.1 from 3.6 in September, surpassing the forecast of 10.2.
In the UK, wage growth eased to its lowest level in over two years in the three months to August, supporting prospects for further central bank interest rate cuts. Excluding bonuses, average earnings grew by 4.9% year-on-year, down from the 5.1% increase recorded in the previous three months ending in July, according to the Office for National Statistics. The unemployment rate slightly decreased to 4% in the three months leading to August, against the expected stability at 4.1%.
