Europe: Shares fall as rate uncertainty, earnings sour sentiment
EUROPEAN shares logged their third session of declines on Thursday as uncertainty over the future moves of central banks grew, while investors parsed a new raft of corporate earnings.
The pan-European Stoxx 600 index fell 0.1 per cent to 574.83 points and most regional bourses also ended the day in the red.
The US Federal Reserve cut interest rates on Wednesday but Chair Jerome Powell said another reduction could be out of reach this year, causing investors to dial back bets on a December cut.
Ipek Ozkardeskaya, senior market analyst at Swissquote Bank, said the hawkish stance on the December cut was “leading to a bearish readjustment of the market expectations and some pull-down in the risk sentiment”, stressing major global indexes.
The European Central Bank’s meeting was uneventful as it held rates steady on Thursday and gave nothing away on future actions.
Industrial stocks are biggest drag
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Industrial stocks were the biggest drag on the Stoxx 600. Schneider Electric fell 3.3 per cent despite beating organic growth forecast, while defence firm Kongsberg Gruppen bottomed the benchmark index with an 18.3 per cent decline on plans to spin off its maritime business.
Automobile stocks fell the most. Stellantis slid 8.9 per cent after flagging one-off charges related to changes in regulation, strategy and products.
Meanwhile, three of the biggest US technology companies flagged plans on Wednesday to accelerate capital spending over the next year.
“(These) results paint a pretty picture for the AI trade... Spending is going up across the board as demand remains robust, and as supply remains constrained. Until those dynamics flip, AI will remain the main game in town,” said Ben Barringer, head of technology research at Quilter Cheviot.
Technology stocks were the top gainers, up 0.9 per cent.
Among others, WPP plunged 16 per cent after it warned on profit again and its new CEO said it would take time to turn around the company.
Societe Generale fell 3.6 per cent after its CEO declined to commit to handing over more excess capital to shareholders.
ING gained 5.8 per cent after the lender announced plans to allocate 1.6 billion euros (S$2.5 billion) on share buybacks and dividends. Standard Chartered rose 3.6 per cent after saying it would hit a key profitability target a year earlier than expected.
Airbus climbed 2.1 per cent after its third-quarter earnings topped expectations.
Novo Nordisk fell 3.6 per cent after entering the bidding war with Pfizer for US biotech Metsera, while Puma declined 8.3 per cent after an over 15 per cent fall in third-quarter sales.
On the trade front, the US struck a deal to trim tariffs on China in exchange for Beijing resuming US soybean purchases, keeping rare earths exports flowing and cracking down on the illicit trade of fentanyl. REUTERS
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