European Stocks Close Mixed After Cautious Session

European stocks ended mixed on Thursday as investors stayed largely cautious, tracking earnings announcements and digesting Bank of England’s policy statement.

Although optimism about growth aided sentiment, buying interest was a bit subdued due to worries about spikes in coronavirus cases in Asian countries.

The Bank of England today kept its interest rate and quantitative easing unchanged. The nine-member Monetary Policy Committee, headed by Governor Andrew Bailey, unanimously voted to hold the interest rate at 0.10%.

The bank retained the stock of corporate bond purchases at GBP 20 billion and the government bond purchases at GBP 875 billion.

The bank forecast the UK economy to grow sharply by 7.25% instead of 5% estimated in February. But, the outlook for 2022 was lowered to 5.75% from 7.25%, while that for 2023 was retained at 1.25%.

According to the Monetary Policy Report, UK GDP is expected to rise by around 4.25% in the second quarter of 2021, as more people are vaccinated and Covid related restrictions ease.

Although inflation is below the 2% target, it will rise temporarily above the target towards the end of 2021, owing mainly to developments in energy prices, the bank said. Inflation is projected to return to around 2% in the medium term.

The pan European Stoxx 600 drifted down 0.12%. The U.K.’s FTSE 100 advanced 0.52%, Germany’s DAX gained 0.17% and France’s CAC 40 climbed 0.28%, while Switzerland’s SMI edged up marginally.

Among other markets in Europe, Iceland, Ireland, Russia, Spain and Turkey closed higher.

Czech Republic, Denmark, Finland, Netherlands, Norway and Sweden ended weak, while Austria, Belgium, Greece, Poland and Portugal settled flat.

In the UK market, Fresnillo surged up more than 6%. British American Tobacco advanced 3.2% and Imperial Brands climbed 3%, while Legal & General Group, National Grid, Land Securities, Evraz, Burberry Group, United Utilities and Unilever gained 2 to 2.8%.

Retailer Next gained 1.8% as it raised full-year profit forecasts for the second time in two months.

Admiral Group shares ended 4.7% down. Ocado Group, Renishaw, Pershing Square Holdings, Scottish Mortgage and WPP lost 2 to 3.1%. Reckitt Benckiser, Informa, Croda International, BP and Kingfisher also ended sharply lower.

In Germany, Thyssenkrupp, Munich RE, MTU Aero Engines, Beiersdorf, Covestro, BASF, Linde and Deutsche Post gained 1 to 3%.

Allianz declined nearly 4%. Volkswagen ended notably lower, giving up earlier gains after raising its 2021 operating margin targets.

Fresenius Medical Care, Infineon Technologies, Deutsche Wohnen, HeidelbergCement and RWE ended with sharp to moderate losses.

In the French market, Societe Generale shares rallied 5.5% after the bank reported net income for the first quarter that handily beat expectations.

Legrand gained about 3.5%. Thales rose after reporting a surge in sales, while Carrefour, ArcelorMittal, Air Liquide, Bouygues, Veolia, Engie and Unibail Rodamco also closed with strong gains.

Air France-KLM ended sharply lower after posting wider first-quarter operating loss and announcing it is considering raising more capital. STMicroElectronics and WorldLine also ended with sharp losses.

In economic releases, Eurozone retail sales grew for the second straight month in March, rising 2.7%, but the pace of growth weakened from February, when volume was up 4.2%, Eurostat reported. However, that was higher than economists’ forecast for a 1.5% increase.

On a yearly basis, retail sales rebounded 12%, following a 1.5% drop in February. This was also faster than the 9.6% increase economists had forecast.

German factory orders growth accelerated more than expected in March, data from Destatis revealed. Factory orders increased 3% month-on-month in March, faster than the revised 1.4% increase seen in February. Orders were expected to climb 1.7%. On a yearly basis, new order growth increased sharply to 27.8% from 5.8% in the previous month.

Germany’s construction sector continued to decline in April, survey data from IHS Markit showed. The Purchasing Managers’ Index for the construction sector fell to 46.2 in April from 47.5 in March.

The U.K. service sector grew at the fastest pace since October 2013, driven by sharp increases in business and consumer spending amid easing of restrictions related to the COVID-19 pandemic, final data from IHS Markit showed.

The Chartered Institute of Procurement & Supply services business activity index advanced to 61.0 in April from 56.3 in March. The score was well above the flash estimate of 60.1.

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