Europe midday: Stocks inch lower as risk appetite fades, ECB in focus

11th Apr 2024 10:53

(Sharecast News) - European stock markets were in the red on Thursday as nervousness about stubborn inflation and uncertainty surrounding the interest-rate outlook dampened risk sentiment.

The pan-European Stoxx 600 index was down 0.24% at 505.39 by the midday mark CEST, with losses of between 0.1% and 0.5% being registered across London, France, Frankfurt, Milan and Madrid.

Global stock markets suffered a steep sell-off on Wednesday afternoon - though European indices had recovered somewhat by the close of play - after a stronger-than-expected acceleration in US inflation dashed any hopes that the Federal Reserve is close to cutting interest rates. This was the third straight month of the consumer price index coming in above forecasts.

"While this situation persists, rate cut expectations are being pushed further out into the year with September now pegged as the lift off point for easing," said analyst James Harte of TickMill Group.

"If inflation continues to hold around current levels, however, we could well see rates projections for the remainder of the year changing significantly with the Fed likely to alter its forecast from three rate cuts down to two or less."

Back in Europe, with no major economic data due for release, eyes were firmly fixed on the European Central Bank meeting, which concludes at 1415 CEST, though no change in policy is expected.

"Equity bulls will hope that the ECB can turn the tide on market sentiment today, with [ECB chief] Christine Lagarde expected to take on a notably more dovish tone that could set us up for a rate hike in June," said Joshua Mahony, chief market analyst at IG.

Market movers

French advertising and PR titan Publicis edged higher after reporting a 5.3% increase in revenues in its first quarter, ahead of expectations, on the back of new business wins.

Swiss fragrance group Givaudan also impressed with a 13% jump in first-quarter like-for-like sales, ahead of the 6.9% growth expected by consensus.

UK-listed biopharma giant AstraZeneca announced that it will increase its annual dividend by 7%, which the board said demonstrates its confidence in the company's performance and cash generation.

Elsewhere in London, broker comments were moving stocks: Marks & Spencer gained at JPMorgan Cazenove upgraded the retailer to 'overweight' from 'neutral'; while asset managers Jupiter and Liontrust were hit by downgrades from Barclays, to 'underweight' and 'equal weight', respectively.

Meanwhile, UK-listed self-storage firm Lok'nStore surged 17% after agreeing to be bought by Belgian rival Shurgard in a £378m deal.