FX.co ★ European Stocks Close Notably Lower On Weak Earnings, Economic Data

European stocks experienced a significant downturn on Thursday, largely affected by disappointing earnings reports from major U.S. tech firms such as Microsoft and Meta Platforms, coupled with data pointing to a larger-than-anticipated spike in eurozone inflation.

Microsoft cautioned of slower growth for the fiscal year, while Meta Platforms noted a substantial increase in expenses related to artificial intelligence infrastructure. Both companies delivered lackluster quarterly performance.

The pan-European Stoxx 600 index dropped by 1.2%. The FTSE 100 in the U.K. fell by 0.61%, Germany's DAX by 0.93%, France's CAC 40 by 1.05%, and Switzerland's SMI slid down by 1.46%.

Elsewhere in Europe, markets in Austria, Belgium, Denmark, Finland, Ireland, Netherlands, Norway, Poland, Russia, Spain, Sweden, and Turkey also weakened, while Iceland and Portugal closed on an upbeat note. Greece, however, witnessed declines.

In the U.K., shares of Smith & Nephew plunged 12.5% after the company revised its full-year sales forecast downward due to weakening trade in China. Additionally, Persimmon dropped 7.5% and Taylor Wimpey slid 6.7%.

Losses ranging from 3% to 5.2% were seen in companies such as Howden Joinery Group, Whitbread, Barratt Developments, Redrow, Kingfisher, Vistry Group, Schroders, Berkeley Group Holdings, Next, Entain, IMI, British Land, B&M European Value Retail, Rolls-Royce Holdings, Endeavour Mining, Segro, Associated British Foods, and Frasers Group. Conversely, Smith (DS) Plc saw an impressive gain of 14.3%, while Coca-Cola HBC surged after upgrading its full-year outlook. Shell advanced 3.5% following a milder-than-projected decline in third-quarter profits. British American Tobacco, Imperial Brands, and Rentokil Initial rose by 1% to 1.8%.

In Germany, Zalando fell 4.1%, with SAP, Rheinmetall, Infineon, Volkswagen, MTU Aero Engines, Beiersdorf, BMW, Vonovia, Porsche, RWE, Adidas, Henkel, and Mercedes-Benz decreasing by 1% to 2.5%. Fresenius Medical Care gained approximately 1.4%, while Sartorius, Merck, Deutsche Bank, and Fresenius posted moderate gains.

In France, BNP Paribas saw a notable 4.8% decline, with Capgemini, STMicroelectronics, Pernod Ricard, Thales, Sanofi, Hermès International, Vivendi, LVMH, and Publicis Groupe falling between 1% to 4%. TotalEnergies reported lower net income and sales for the third quarter, leading to a sharp decline in its shares. Meanwhile, Societe Generale surged nearly 12% following stronger-than-expected third-quarter earnings, buoyed by a 10.5% increase in year-on-year revenue. Edenred and Stellantis climbed by 3.3% and 3%, respectively, with Bouygues, Orange, Carrefour, and Airbus closing with moderate gains.

In economic updates, the eurozone witnessed a higher-than-anticipated rise in inflation in October, driven by food and energy prices, yet staying within the European Central Bank's target range, supporting the argument for gradual monetary policy relaxation. According to a flash estimate by Eurostat, the harmonized index of consumer prices grew annually by 2%, surpassing the forecasted 1.9% rise from 1.7% in September. Core inflation, excluding energy, food, alcohol, and tobacco, held steady at 2.7% in October, contrary to the expectation of a slight dip to 2.6%.

Data from Eurostat also indicated that the eurozone's unemployment rate stayed unchanged at 6.3% in September, defying predictions of a slight increase to 6.4%.

In France, the provisional estimate from the statistical office INSEE showed that consumer price inflation rose slower than expected, ticking up to 1.2% in October from 1.1% in September, below the anticipated rise to 1.9%.

In Germany, import prices decreased by 1.3% year-on-year in September, reversing a 0.2% rise in August, marking the steepest decline since April. Month-over-month, import prices fell by 0.4%, consistent with August's rate. Retail sales in Germany, however, defied expectations by rising 1.2% in September, driven by increased non-food sales, countering predictions of a 0.7% decline, according to Destatis.