Europe open: Shares slip as investor mull rate calls; Mercedes slumps

20th Sep 2024 07:57

(Sharecast News) - European shares opened lower as investors digested a raft of rate decisions from central banks across the globe, while automakers fell sharply after Mercedes-Benz cut profit margins again.

The pan-regional Stoxx 600 index was down 0.48% to 519 having risen sharply on Thursday after the US Federal Reserve cut its benchmark rate by a bumper 50 basis points.

However, in the 24 hours since the UK, Norway, Japan and China all held rates steady.

US and Asian markets were up overnight.

"In something of a delayed reaction, US markets forged ahead as the benefits of a larger than expected interest rate cut became clearer, pushing up a broad selection of shares amid renewed buying interest," said Interactive Investor head of markets Richard Hunter.

"The main indices had previously erased gains following the announcement on Wednesday, but sentiment improved drastically as investors absorbed Fed Chair Powell's comments that a deep cut in a relatively strong economy would ultimately prevent a recession."

"The possibility of the ideal soft landing scenario was further enhanced by a weekly jobless claims number which showed a fall of 12000 jobs, comfortably below estimates."

In economic news, German industrial producer prices in August fell 0.8% year on year thanks to lower energy costs. However, they were up 0.2% on the previous month.

UK retail sales rose by a better-than-expected 1% in August, data from the Office for National Statistics revealed.

In equity news, automakers slumped, led by Mercedes-Benz, which cut its full-year profit margin for the second time in less than two months, after overall sales volume fell in China.

Shares in Porsche, BMW and Volvo all fell on the news.

Reporting by Frank Prenesti for Sharecast.com