European Stocks Close Lower On Inflation Worries

European stocks closed lower on Wednesday, weighed down by worries about inflation and the likely impact of Chinese real estate majors’ financial woes on growth.

Markets also noted UK’s budget that contained proposals for multi-billion pound spending on healthcare and transport, and a rise in the U.K.’s national living wage from £8.91 per hour to £9.50, which is set to come into effect from April 1.

They also looked ahead to the European Central Bank meeting on Thursday for guidance on its pandemic bond-buying program.

The pan European Stoxx 600 declined 0.36%. The U.K.’s FTSE 100 and Germany’s DAX both shed 0.33%, while France’s CAC 40 slid 0.19%. Switzerland’s SMI ended 0.49% down.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Spain and Sweden closed weak.

Greece, Iceland and Turkey ended higher.

In the UK market, Admiral Group declined more than 5%. Fresnillo ended 3.5% down. Pearson, Aveva Group, Flutter Entertainment, Hikma Pharmaceuticals, Kingfisher, Pershing Square Holdings, Antofagasta and Barclays Group lost 1.6 to 3%.

Miners Anglo American and Glencore fell 2% and 2.65%, respectively, as concerns about Chinese intervention hit metal prices. Rio Tinto and BHP Group ended lower by 1.4% and 1.3%, respectively.

Taylor Wimpey, Entain, SSE, Compass Group, Sainsbury (J), Persimmon, National Grid, WPP, Segro, Barratt Developments, Bunzl and Berkeley Group Holdings gained 1 to 2.7%.

FirstGroup gained 4.5%. The transport group said it plans to return up to 500 million pounds to its shareholders through a tender offer at 105 pence per share.

HomeServe climbed nearly 3%. The home repairs and improvements business said that it has completed the acquisition of CET Structures Ltd., a digitally-enabled home emergency assistance business in the UK, for circa 53 million pounds.

In France, WorldLine shares plunged nearly 16% to a 52-week low. Technip declined more than 3%, Atos shed nearly 3%, Essilor slid 1.6% and Hermes International declined 1.4%.

Sodexo climbed nearly 5.5% after reporting stronger than expected quarterly results. Schneider Electric shares gained 2.5% after the energy management firm reported that its third-quarter revenues were 7.22 billion euros, a growth of 11.8% from last year.

Michelin, Faurecia, Valeo, Engie and Publicis Groupe also closed notably higher.

In the German market, Sartorius tumbled more than 7%. Deutsche Bank shares declined nearly 7% after core bank profit before tax declined slightly in its third quarter.

HelloFresh and Deutsche Wohnen lost 4% and 3.4%, respectively. Deutsche Post, Volkswagen and Qiagen lost 1 to 1.6%.

Puma rallied more than 3% after raising its sales and profit forecasts for the year. Fresenius gained 2.5%. Symrise, Munich RE, E.ON, RWE and Fresenius Medical Care moved up 1 to 1.7%.

In Spain, Banco Santander shares shed 2.85% after the lender said it is well on track to significantly outperform its profitability target for 2021.

In economic releases, German import price index climbed 17.7% year-on-year in September following a 16.5% rise in August, Destatits reported. Economists had forecast an 18% increase.

The latest inflation rate was the highest year-on-year change since August 1981, when it was 19.5%.

German consumer confidence is set to improve in November on increasing propensity to consume, survey results from the market research group Gfk showed. The forward-looking consumer confidence index rose to 0.9 in November from revised 0.4 in October. Economists had forecast the index to fall to -0.5.

The INSEE official statistics agency said that a gauge of French consumer sentiment fell 2 points to 99 in October from 101 in September.

U.K. shop prices slid 0.4% year-on-year in October after a 0.5% drop in the previous month, the British Retail Consortium said.

Market Analysis