European Stocks Close Sharply Lower

European stocks closed sharply lower on Wednesday after Fitch downgraded the U.S’s sovereign credit rating from AAA to AA+, citing fiscal deterioration and repeated debt ceiling standoffs.

Fitch sad that during the last 20 years, there has been a decline in the standard of governance in America, the effect of which is visible in fiscal and debt decisions.

Also, worries about global economic growth following recent data showing contraction in manufacturing activity in several countries continued to hurt sentiment.

Investors also looked ahead to the Bank of England’s interest rate announcement on Thursday, and the U.S. jobs data due on Friday, for directional clues.

The pan European Stoxx 600 dropped 1.35%. The U.K.’s FTSE 100 and Germany’s DAX both ended lower by 1.36%, and France’s CAC 40 declined 1.26%, while Switzerland’s SMI ended down 0.85%.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Spain and Sweden ended with sharp to moderate losses.

Czech Republic ended flat, while Turkiye closed higher.

In the UK market, Ocado Group, Endeavour Mining and Prudential lost 5.6%, 5.2% and 4.4%, respectively.

Hargreaves Lansdown, Anglo American Plc, Scottish Mortgage, Admiral Group, Barclays, JD Sports Fashion, ABRDN, 3i Group, Schrodders, BT Group, HSBC Holdings, Antofagasta and Rio Tinto shed 2.5 to 4%.

BAE Systems rallied 6.36% after the defense company upgraded its guidance for 2023 after reporting strong first-half figures.

Taylor Wimpey climbed 2.85% after its first-half trading beat expectations. Convatec Group gained 6.32%, while Smurfit Kappa Group ended 1.83% up.

In the German market, Siemens Healthineers tumbled more than 5.5%. The medical device maker confirmed its outlook after reporting an unexpected drop in quarterly operating profit.

Symrise lost 3.6% after reporting lower earnings for the first half of the year. Zalando, Vonovia, Deutsche Telekom, Deutsche Bank, E.ON, RWE, Infineon and Adidas lost 2 to 3.6%.

Siemens Energy gained about 1.7% and Porsche advanced 1.1%. Daimler Truk Holding and BMW posted modest gains.

In Paris, WorldLine drifted down 3.7%. TotalEnergies, Vinci, Teleperformance, BNP Paribas, Alstom, Bouygues, LVMH, Sanofi, Engie, Renault, Essilor, Unibail Rodamco, Kering, Eurofins Scientific, ArcelorMittal and Dassault Systemes ended lower by 1.4 to 3%.

In economic news, Swiss consumer confidence improved for the third straight month in the third quarter, survey results from the State Secretariat for Economic Affairs, or SECO, showed Wednesday.

The consumer confidence index dropped to -27.1 in the third quarter from -29.6 in the preceding three-month period.

Despite this further improvement, the consumer sentiment index remained well below the long-term average of -6.