FX.co ★ European Stocks Close Broadly Lower On Growth Worries, Rate Uncertainty

European stocks concluded Tuesday's trading session with a downward trend as investors responded to quarterly earnings and corporate announcements. The markets were further influenced by uncertainties regarding future interest rate cuts by the Federal Reserve, the approaching U.S. presidential election, and ongoing Middle East tensions.

With the November 5 election looming, elevated Treasury yields reflect market apprehensions about the U.S. deficit trajectory, irrespective of the election outcome.

Earlier data showed that the U.K.'s budget deficit widened more than expected in September, reaching the highest level for that month since 2021. Chancellor Rachel Reeves is preparing to present the Autumn Budget 2024 on October 30, which is anticipated to introduce tax hikes and spending cuts totaling GBP 40 billion. Darren Jones, the Chief Secretary to the Treasury, indicated that the budget will involve challenging decisions necessary to stabilize the economy's foundation and initiate promised changes.

The pan-European Stoxx 600 index receded by 0.21%. The FTSE 100 in the U.K. decreased by 0.14%, Germany's DAX fell by 0.2%, France's CAC 40 edged down slightly by 0.01%, and Switzerland's SMI declined by 0.8%.

Across other European markets, Austria, Belgium, Denmark, Finland, Greece, Netherlands, Poland, Portugal, Russia, Spain, and Sweden experienced losses. However, Iceland, Ireland, Norway, and Türkiye ended the day on a positive note.

In the U.K. market, shares of Admiral Group, Persimmon, Taylor Wimpey, British Land, Barratt Redrow, Diploma, Land Securities, Relx, National Grid, Reckitt Benckiser, Next, Halma, and Rolls-Royce Holdings fell by 1% to 2%. Mulberry Group's stock plummeted over 8% following its rejection of a second takeover bid from Mike Ashley's Frasers Group, labeling the proposal as "untenable."

Conversely, Fresnillo's shares surged nearly 3%, Melrose Industries saw a 2% increase, and IHG closed with a 1.73% gain. Other companies like British American Tobacco, Entain, Standard Chartered, EasyJet, Smith (DS), Croda International, Spirax Group, and Barclays experienced gains of 1% to 1.5%.

In Germany, Munich RE dropped about 2.7%. Notable decliners included Vonovia, Brenntag, Allianz, RWE, Hannover Rueck, E.ON, Siemens Healthineers, Henkel, Adidas, Infineon, and Deutsche Telekom, which all suffered losses between 1% and 2%. Meanwhile, SAP advanced by 2.15% after elevating its full-year targets due to robust performance in its cloud business during the third quarter. Deutsche Bank rose approximately 1.25%, with Rheinmetall, Mercedes-Benz, Sartorius, BMW, and Commerzbank seeing moderate gains.

In France, Eurofins Scientific's shares took a significant hit, falling over 11%. Saint-Gobain, Sanofi, Safran, Publicis Groupe, Unibail Rodamco, Engie, Credit Agricole, and Legrand recorded declines ranging from 0.7% to 1.6%. Conversely, Edenred, Essilor, STMicroElectronics, Airbus Group, and Accor gained between 1.5% and 2.2%, with Capgemini, L'Oreal, Dassault Systemes, Kering, LVMH, and Stellantis also finishing strongly.

Data from the Office for National Statistics reaffirmed the increased U.K. budget deficit in September, amounting to GBP 16.6 billion compared to GBP 14.5 billion the prior year, marking the third-largest borrowing figure for September since records began in January 1993.

Additionally, the European Automobile Manufacturers' Association (ACEA) reported a decline in new car registrations for the second consecutive month in September, with sales down 6.1% year-on-year, a less severe drop than the 18.3% decline recorded in August.