European stocks declined for a second consecutive session on Friday, primarily due to concerns that the Federal Reserve might maintain higher interest rates for an extended period. Disappointing corporate earnings also contributed to the downward trend.
Renewed interest-rate anxieties were spurred by comments from three Federal Reserve officials, advocating for sustained high borrowing costs by the U.S. central bank.
China's economic data presented a mixed picture, though the nation's central bank took further steps to aid the struggling property sector, which helped alleviate some concerns about the economic recovery.
In the Eurozone, the Consumer Price Index (CPI) remained steady at 2.4% year-on-year for April, mirroring March's figures.
France's statistical office, INSEE, reported that the country's unemployment rate stabilized in the first quarter after an increase in the previous quarter. The International Labour Organization (ILO) unemployment rate was steady at 7.5%, matching the previous quarter's figure, and was slightly above the 7.4% forecast. This rate was 0.4 percentage points higher compared to the first quarter of 2023, which, like the fourth quarter of 2022, was the lowest since 1982.
ECB Vice-President Luis de Guindos projected that Eurozone inflation would approach the 2% target by 2025.
In the U.K., Chancellor Jeremy Hunt, in a speech about the state of the economy, promised further tax cuts if the Conservative party wins the next general election.
The pan-European Stoxx 600 index decreased by 0.13%. The FTSE 100 in the UK fell by 0.22%, Germany’s DAX dropped 0.18%, and France's CAC 40 declined by 0.26%. Contrarily, Switzerland’s SMI rose by 0.76%.
While markets in Denmark, Finland, Greece, Portugal, and Sweden ended weaker, Austria, Iceland, Norway, Poland, Russia, Spain, and Turkiye saw gains. Belgium and the Netherlands remained flat.
In the UK stock market, Antofagasta and Fresnillo rose by 3.55% and 3.36%, respectively. Rio Tinto increased by nearly 2.5%. Other notable gainers included Sage Group, Anglo American Plc, Tesco, Smith (DS), BT Group, and United Utilities.
Entain dropped approximately 5.5%, and Ashtead Group fell by 4.51%. Burberry Group, JD Sports Fashion, Spirax-Sarco Engineering, and Flutter Entertainment also experienced declines ranging from 2% to 3.5%.
Auto Trader Group faced a sharp decline following a rating downgrade from Morgan Stanley. Land Securities declined by more than 2% after reporting a drop in annual rental income earnings to £371 million from £393 million in 2023.
In Germany, Commerzbank, Symrise, and Deutsche Boerse increased by 1.6% to 2%. Covestro, Daimler Truck Holding, Munich RE, and Deutsche Telekom posted moderate gains.
E.ON fell by over 5%, with Zalando, Sartorius, Fresenius Medical Care, Siemens Healthineers, MTU Aero Engines, Fresenius, HeidelbergCement, RWE, Siemens Energy, Siemens, Deutsche Bank, Porsche, and Continental also posting notable losses.
In France, Carrefour, Credit Agricole, Michelin, Essilor, BNP Paribas, Vivendi, Renault, and TotalEnergies performed well. Conversely, Teleperformance, Kering, Legrand, Stellantis, Eurofins Scientific, Schneider Electric, L'Oreal, Sanofi, Publicis Groupe, Edenred, and STMicroElectronics saw losses of 1% to 3%.
