European markets experienced a downturn on Tuesday due to the intensification of the Russia-Ukraine conflict and growing anxiety about global economic prospects, both contributing to a prevailing pessimistic sentiment.
Investors exhibited caution and retreated from riskier assets in response to Russian President Vladimir Putin's recent adjustment of nuclear policy. The Kremlin has issued a warning that it might contemplate a nuclear response if a conventional missile attack supported by a nuclear-armed state is directed at it.
In the midst of these geopolitical tensions, market participants analyzed the latest set of regional economic reports, which included data on Eurozone inflation, current account figures, and Swiss trade statistics.
The pan-European Stoxx 600 ended with a decline of 0.45%. London's FTSE 100 slipped by 0.13%, while Germany's DAX and France's CAC 40 both registered losses of 0.67%. Switzerland's SMI also fell, ending 0.84% lower.
Elsewhere across Europe, markets in Austria, Belgium, Finland, Greece, Ireland, the Netherlands, Poland, Portugal, Russia, Spain, Sweden, and Türkiye recorded notable losses, ranging from moderate to sharp declines. Conversely, Denmark and Iceland demonstrated resilience, closing with gains, while Norway remained unchanged.
In the UK, Diploma's shares plunged by 8% following weak earnings and unfulfilling revenue forecasts. Other notable decliners included Melrose Industries, Prudential, Rolls-Royce Holdings, IAG, Weir Group, Barclays, Lloyds Banking Group, Hiscox, Informa, Whitbread, Admiral Group, BP, Ashtead Group, Associated British Foods, Glencore, and Legal & General, which saw declines of between 1% and 3%. Mulberry Group's stock was significantly pressured by a wider first-half loss.
On a positive note, Imperial Brands rose due to robust operating profit figures in the recent quarter, and the company expressed confidence in delivering another strong performance next year. BT Group and British Land enjoyed significant gains, while Land Securities, Airtel Africa, Vistry Group, Persimmon, Croda International, DCC, Sainsbury (J), Convatec Group, BAE Systems, National Grid, Marks & Spencer, Beazley, AstraZeneca, Hikma Pharmaceuticals, and Berkeley Group Holdings advanced between 1% and 2%.
In Germany, Siemens fell by over 3%, with declines also seen in Continental, Porsche, Puma, Infineon, Brenntag, Deutsche Bank, Commerzbank, Mercedes-Benz, Volkswagen, RWE, Beiersdorf, Daimler Truck Holding, Allianz, and Deutsche Post, which decreased by 1% to 2.2%. Conversely, Rheinmetall soared by almost 4%, and Vonovia, Symrise, E.ON, and SAP saw upticks of 0.6% to 1%.
The French market witnessed declines in Kering, Vivendi, Stellantis, LVMH, Accor, BNP Paribas, STMicroelectronics, Bouygues, Legrand, Saint Gobain, Société Générale, Hermès International, and Veolia, all falling between 1% and 2.3%. However, Essilor and Thales each gained approximately 1.75%, while Unibail Rodamco, Dassault Systèmes, Capgemini, Edenred, and Orange finished higher.
On the economic front, Eurostat's final data indicated that the consumer price index in the Eurozone rose by 0.3% month-over-month in October, marking the largest rise in six months, following a 0.1% drop in September. Annual inflation increased to 2% in October, up from 1.7% in September.
Core consumer prices in the Eurozone saw a year-over-year increase of 2.7% in October, according to the report.
The Eurozone's current account surplus expanded in September, driven by a recovery in primary income, as shown by European Central Bank data. The current account surplus reached EUR 37 billion in September, an increase from EUR 35 billion in the previous month, surpassing expectations of a decline to EUR 27 billion.
Switzerland's foreign trade surplus experienced a slight reduction in October, despite a surge in exports, according to the Federal Customs Administration. The trade surplus climbed to CHF 5.97 billion in October from CHF 4.03 billion in September.
In real terms, exports surged by 11.2% over the month, offsetting a 2.3% decline in September. Imports maintained a steady growth rate of 0.7%. On a nominal basis, exports and imports grew by 10.2% and 1.8%, respectively.
