European Stocks Close On Weak Note As Aggressive Rate Hikes Fuel Growth Worries

(RTTNews) - European stocks closed lower on Thursday, extending losses from the previous session, as another 75-basis point interest rate hike by the Federal Reserve and hawkish comments from the central bank Chair Jerome Powell hurt sentiment.

The Bank of England too raised its benchmark lending rate by 75 basis points, the biggest hike in 33 years.

The nine-member Monetary Policy Committee decided to raise the bank rate by 75 basis points to 3% from 2.25%. The current tightening cycle that began last December has taken the bank rate to the highest since November 2008.

The BoE expects the economy to shrink 0.5% in the third quarter and by 0.3% in the fourth quarter of this year. The economy is projected to remain in recession throughout next year and the first half of 2024, and to recover only gradually thereafter.

The unemployment rate is forecast to rise to just under 6.5% by the end of the forecast period and the aggregate slack increases to 3% of potential GDP.

In September, inflation was 10.1%, the highest since the series began in January 1997. The BoE expects inflation to peak at around 11% in the fourth quarter of this year.

In addition to the policy statements of the Fed and the BoE, investors also digested other economic data from Europe, and the latest batch of earnings updates.

The pan European Stoxx 600 ended 0.93% down. Germany's DAX shed 0.95% and France's CAC 40 declined 0.54%. The U.K.'s FTSE 100 advanced 0.62%, while Switzerland's SMI fell 0.89%.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Poland, Russia, Spain and Sweden closed weak.

Czech Republic, Norway, Portugal and Turkiye ended higher.

In the UK market, Sainsbury (J) climbed nearly 7%. Harbour Energy (HBR.TO) surged 4.8%. Smith & Nephew, Tesco, Haleon, Shell and British American Tobacco gained 2 to 3%.

BT Group plunged nearly 9%. Endeavour Mining ended 4.6% down. RS Group drifted down 7.3% after an announcement that its CEO is taking a leave of absence.

Flutter Entertainment shed about 4% after Australia's financial crime watchdog ordered an audit of Sportsbet, an online betting house operated by Flutter and British gambling firm Bet365.

Rolls-Royce Holdings, Dechra Pharmaceuticals, Fresnillo, Halma, Coca-Cola and Croda International Group lost 2 to 4%.

In Paris, Faurecia tumbled nearly 9%. Legrand and Unibail Rodamco both shed about 5.1%. Renault, Dassault Systemes, Michelin, Hermes International, ArcelorMittal, Saint Gobain and L'Oreal lost 2 to 3.4%.

BNP Paribas, AXA, Sodexo and Credit Agricole ended with strong gains.

In the German market, BMW, Symrise, Continental, Siemens Healthineers, Adidas, HelloFresh, Porsche Automobil, Deutsche Post, Deutsche Wohnen, Sartorius, Volkswagen and Covestro lost 2 to 4.3%.

Zalando rallied nearly 7.5%. Linde, Allianz and Munich RE posted modest gains.

Danish IT consultancy firm Netcompany soared 20% after posting strong third-quarter earnings.

In other economic news, the UK service sector shrank in October for the first time since early 2021, final data from S&P Global showed.

The Chartered Institute of Procurement & Supply services Purchasing Managers' Index posted 48.8 in October, down from 50.0 in September. This was the lowest score since January 2021 but above the flash reading of 47.5.

The euro area jobless rate dropped to a record low in September after remaining stable in the previous four months, data released by Eurostat revealed on Thursday.

The jobless rate fell to a seasonally adjusted 6.6% from 6.7% in August, which was revised up from 6.6%.