FX.co ★ Major European Markets Close Lower On Rate Uncertainty, Growth Concerns

On Thursday, principal European markets closed in the red as investors responded to corporate earnings updates and an announcement from the Federal Reserve indicating that US interest rates would continue to remain high for an extended period.

On Wednesday, the Federal Reserve left interest rates untouched due to insufficient progress towards achieving its 2% inflation target in recent months. Additionally, a survey that illustrated a continuing decline in manufacturing activity within the eurozone also negatively impacted sentiment. According to S&P Global's final eurozone manufacturing PMI report, the index has slipped to 45.7 in April from 46.1 in March.

The Stoxx 600, a Pan-European index, declined by 0.22%. Notably, Germany's DAX and France's CAC 40 both ended the day with losses of 0.2% and 0.88%, respectively. On the other hand, the UK's FTSE 100 saw an increase of 0.63%.

Other European markets, including those in Belgium, Finland, Greece, Portugal, Spain, and Turkey, ended the day on a higher note. Conversely, Denmark, Iceland, Ireland, Norway, Poland, Russia, and Sweden witnessed downward trends, while Austria and the Netherlands remained flat.

In the UK, Standard Chartered saw a nearly 9% jump following a stronger-than-expected first-quarter profit driven by increased interest rates and growth in its wealth management sector. Packaging producer Smurfit Kappa Group also reported a robust first-quarter revenue of €2.7 billion, leading to a 5.8% rise in its shares.

Elsewhere in Germany, Bayer experienced a nearly 3% rally. Conversely, Infineon plummeted more than 4% while other companies like MTU Aero Engines, Zalando, Puma, Rheinmetall, Siemens Healthineers, Adidas and BASF witnessed 1 to 3% losses.

In Paris, shares of Teleperformance leapt nearly 14% after a 26.7% jump in quarterly revenue, largely attributable to the company's acquisition of Dutch rival Majorel completed last year. Meanwhile, Engie’s stock dropped more than 6% while other French companies such as Stellantis, TotalEnergies, Kering, STMicroElectronics, Eurofins Scientific, Carrefour, Air Liquide and Sanofi saw losses ranging from 1 to 4%.

According to a survey by the ifo institute, confidence among companies in Germany's automotive industry improved in April, although concerns lingered regarding a shortage of orders. France's Manufacturing PMI signaled the fastest decline since January, settling at 45.3 in April, slightly up from the preliminary reading of 44.9.

The Organization for Economic Co-operation and Development (OECD) has updated the global economic growth projections for this year and next, despite expressing substantial concerns about the outlook. The global growth forecast for this year was increased to 3.1% from 2.9%, and the outlook for next year was improved to 3.2% from 3%. While the risks surrounding the outlook are becoming better balanced, significant uncertainty persists. The OECD is projecting inflation to slow to 3.6% next year from 5.9% this year and anticipates that inflation will realign with targets in most major economies by the end of 2025. GDP growth in the euro area is projected to remain weak at 0.7% this year and improve to 1.5% next year, driven by a recovery in domestic demand.