European Stocks Fall Amid Economic Concerns

By Shubham Batra and Lisa Pauline Mattackal

(Reuters) – European stocks fell on Thursday as mixed economic data spurred worries about global growth, offsetting gains in interest rate-sensitive sectors, with France’s CAC 40 leading national declines.

The pan-European STOXX 600 index fell 0.5%, with sectors tracking healthcare, chemicals, and personal goods all declining over 1%.

Economic worries continued to weigh on sentiment. German industrial orders rose more than expected in July, but euro zone retail sales slipped on an annual basis. This, combined with signs of a weakening U.S. labor market, kept investors cautious ahead of key U.S. nonfarm payrolls data on Friday.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, noted, “The industrial orders were good news for Germany, but everybody right now is focused on U.S. job data… tension in the market is growing higher into tomorrow’s U.S. job report which is why we see a continued sell-off in the U.S. and European stock markets.”

France’s benchmark index slipped 0.9%, marking its third consecutive loss, as concerns about a slowdown in top consumer China impacted luxury stocks. An index of luxury stocks dropped over 3%, with LVMH and Hermes International slumping 3.6% and 6.4%, respectively.

The selection of Michel Barnier, the EU’s former Brexit negotiator, as France’s prime minister helped lift some bank stocks and government bonds, raising hopes it would soothe the country’s political turmoil since President Emmanuel Macron called for a snap election in June.

Ozkardeskaya commented, “Having a Prime Minister is a good sign and it’s going to calm nerves in the market, but this period of political uncertainty has damaged investor appetite for France.”

Germany’s benchmark DAX index remained flat. The Ifo Institute indicated the economy was likely to stagnate this year, contrasting previous forecasts of 0.4% growth.

Rate-sensitive utility and real estate sectors were the top gainers, both up over 1%, as investors continued to anticipate rate cuts this month from both the European Central Bank and the Federal Reserve. Economists polled by Reuters expect the ECB to cut its deposit rate by 25 basis points on Sept. 12 and again in December.

Among individual stocks, Airbus SE fell 1.4% after Europe’s air safety regulator announced inspections on at least part of its A350 fleet due to an engine part failure during a Cathay Pacific flight.

Vistry surged 8.5% as the British homebuilder announced a buyback of shares worth 130 million pounds following a 7% rise in half-year earnings.

Technology shares broadly fell, extending their slide from the previous session, with ASML Holdings dropping 2.2%, following weakness in U.S. semiconductor stocks.