FX.co ★ European Stocks Close Mixed; ECB Holds Key Rates Unchanged

European stocks closed with mixed results on Thursday as investors evaluated the European Central Bank's (ECB) latest policy announcement and anticipated a potential interest rate cut from the Bank of England next month.

As was widely expected, the ECB kept its primary interest rates unchanged after having reduced them for the first time in five years in the previous session. This decision comes before policymakers take a summer break, with a possible rate cut in September still on the table despite persistent inflation concerns.

Under the leadership of ECB President Christine Lagarde, the Governing Council maintained the main refinancing rate at 4.25%, the deposit facility rate at 3.75%, and the marginal lending rate at 4.5%.

"The Governing Council is determined to ensure that inflation returns to its 2 percent medium-term target in a timely manner," the ECB stated. "It will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim."

Data released today indicated that U.K. wage growth slowed in the three months to May, raising hopes for an interest rate cut in the upcoming Bank of England's rate decision. Wage growth fell below 6 percent for the first time in nearly two years, indicating a cooling labor market.

Corporate updates also influenced investor sentiment. Automotive stocks surged following industry data showing a strong recovery in June new car sales in the EU, with gains in three of the region's four largest markets.

The pan-European Stoxx 600 dropped by 0.16%. The U.K.'s FTSE 100 and France's CAC 40 both increased by 0.21%, while Germany's DAX declined by 0.45%, and Switzerland's SMI fell by 0.7%.

Among other European markets, stocks in Greece, Iceland, Norway, Poland, Portugal, Russia, and Spain closed higher. Belgium, Denmark, and Finland ended lower, while Austria, the Netherlands, Sweden, and Turkey were flat.

In the U.K. market, Frasers Group soared over 9% after setting ambitious targets for its current fiscal year. Schroders rose nearly 5%, and JD Sports Fashion gained 3.65%.

Other notable gainers included WPP, Natwest Group, British American Tobacco, Persimmon, and Burberry Group, each increasing by 2.2 to 3%. Sainsbury, Severn Trent, Haleon, Pershing Square Holdings, Hargreaves Lansdown, SSE, United Utilities, Croda International, BP, Coca-Cola HBC, Shell, and Vistry Group also finished significantly higher.

Conversely, Antofagasta fell nearly 5%, while Melrose Industries and EasyJet closed down 3.77% and 3.68%, respectively. Rolls-Royce Holdings, IHG, Airtel Africa, Glencore, RightMove, Auto Trader Group, Beazley, Rio Tinto, Diploma, Howden Joinery, and AstraZeneca declined by 1 to 3%.

In Germany, Commerzbank, Daimler Truck Holding, and Porsche saw gains of 2.2 to 2.7%. Mercedes-Benz, BMW, Rheinmetall, Siemens Healthineers, Continental, Sartorius, Brenntag, Fresenius Medical Care, Bayer, and Volkswagen rose by 1 to 2%.

Siemens dropped around 4.3%, and Siemens Energy fell by 2.2%. SAP, Infineon, MTU Aero Engines, and Merck also saw decreases of 1 to 1.6%.

In France, Publicis Groupe gained approximately 3.5% after lifting its organic growth target for 2024, following better-than-expected first-half results. Other gainers included Teleperformance, Essilor, Stellantis, Veolia, TotalEnergies, Carrefour, Thales, Kering, Societe Generale, Credit Agricole, Engie, Capgemini, Edenred, Eurofins Scientific, L'Oreal, and Bouygues, which rose by 1 to 2.5%.

Schneider Electric fell nearly 3%, while Safran, Renault, and Accor dropped by 1 to 1.4%.

Swiss engineering group ABB fell by 4% after reporting a 3% drop in orders to $8.44 billion for the second quarter from last year’s $8.67 billion.

Eurostat reported that Eurozone construction output declined for the third consecutive month in May, showing a larger 0.9% monthly decrease after April's 0.4% drop.

In Germany, building permits experienced another significant decline in May, highlighting ongoing construction sector weakness. Data from Destatis revealed a 24.2% year-over-year drop in apartment construction permits in May, worsening from April's 17% decline.

The European Automobile Manufacturers' Association (ACEA) reported a 4.3% year-over-year increase in new car sales in the EU to 1.089 million units in June, reversing a 3% fall in March. Italy saw the strongest growth among the major markets, with a 15.1% increase, followed by Germany’s 6.1% rise.