European equities concluded the trading session on a lower note this past Friday, influenced by unease surrounding the prospects of U.S. interest rate reductions after hawkish remarks from Federal Reserve Chair Jerome Powell. Additionally, underwhelming economic data from China contributed to market apprehension.
Market participants assessed recent regional economic reports while monitoring select corporate earnings announcements. Powell emphasized that the U.S. central bank does not need to hastily reduce interest rates, indicating a cautious approach due to ongoing inflationary challenges.
The Stoxx 600, representing pan-European stocks, declined by 0.77%. Germany's DAX fell by 0.27%, France's CAC 40 decreased by 0.58%, the UK's FTSE 100 slipped by 0.09%, and Switzerland's SMI saw a more substantial decline of 1.33%.
Across Europe, several markets including Belgium, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Poland, Sweden, and Turkey ended in negative territory, while Austria, Norway, Portugal, Russia, and Spain posted gains.
In the UK, B&M European Value Retail saw a decline of 5.12%, with GSK dropping nearly 4%. Other notable decliners included Croda International, AstraZeneca, Relx, Melrose Industries, Associated British Foods, Diploma, Vistry Group, ICG, Halma, and BAE Systems, which faced losses ranging from 2% to 3.4%.
Conversely, Land Securities advanced by 4.3%, and Easyjet surged by 3.75%. Gains were also recorded by Fresnillo, Lloyds Banking Group, British American Tobacco, Sainsbury (J), Frasers Group, and Aviva, each rising by 2% to 3%.
Additional UK market movers such as Prudential, Anglo American Plc, M&G, HSBC Holdings, Antofagasta, Rio Tinto, Legal & General, BT Group, Phoenix Group Holdings, Glencore, JD Sports Fashion, and Hikma Pharmaceuticals finished the session notably higher.
In Germany, Sartorius experienced a steep decline of over 6%, while Merck, Qiagen, Infineon, SAP, MTU Aero Engines, Adidas, and E.ON registered losses between 1% and 2.5%. Meanwhile, Continental and Brenntag gained 3.2% and 3% respectively, with advancements seen in Fresenius Medical Care, Fresenius, Rheinmetall, Siemens Energy, BASF, Henkel, Mercedes-Benz, Deutsche Bank, and Volkswagen, each rising by 1% to 2.3%.
In France, Publicis Groupe dropped by 5.2%, with Capgemini, STMicroElectronics, Sanofi, Dassault Systemes, Legrand, Eurofins Scientific, Pernod Ricard, Schneider Electric, and Thales losing between 1% and 4%. On the flip side, Unibail Rodamco climbed 3.2%, and ArcelorMittal rallied 2.3%, with Credit Agricole, Bouygues, BNP Paribas, Engie, Teleperformance, Carrefour, Saint-Gobain, and Kering posting gains from 1% to 1.6%.
On the economic data front, Destatis reported that Germany's wholesale prices decreased by 0.8% year-on-year in October, a smaller dip than the 1.1% seen in September, marking the slowest decline in three months since the commencement of falling wholesale prices in May 2023. On a month-on-month basis, wholesale prices fell by 0.4% in October, reversing a 0.3% decline in September.
In France, final data from INSEE revealed that consumer price inflation matched the flash estimate, while harmonized inflation for October was slightly revised upwards. The consumer price index rose by 1.2% on an annual basis in October, slightly above the 1.1% recorded in September, aligning with the preliminary estimate.
In the UK, the Office for National Statistics reported marginal GDP growth of 0.1% in the third quarter, following a 0.5% increase in the second quarter. This was below the projected 0.2% growth, largely due to subdued services output, posing a challenge for Chancellor Rachel Reeves.
The European Commission maintained its forecast for Eurozone economic growth at 0.8% for 2024, anticipating a pick-up in domestic demand despite global trade risks from protectionist measures. The region showed modest growth in the second and third quarters alongside easing inflationary pressures.
Earlier on, data from China indicated industrial output grew at a slower rate than expected, up 5.3% in October, while retail sales rose 4.8% annually, surpassing expectations, bolstered by a week-long holiday and the annual Singles' Day shopping event. However, property investment declined 10.3% year-on-year from January to October, with fixed asset investment growth falling short of expectations, fueling calls for further economic stimulus from Beijing.
