European stocks struggle after ECB decides to press pause

European shares struggled but trimmed earlier losses after the European Central Bank (ECB) announced it would keep interest rates unchanged until its next meeting in December.

US indices were trending weaker by the closing bell in Dublin after a series of disappointing earnings updates from tech giants.

Dublin

Performing broadly in line with its peers, Dublin’s Iseq index shed close 0.8 per cent on Thursday, dragged lower by the bigger names.

Ryanair shed 0.6 per cent to close the session at €14.27 per share, trending lower with the rest of the airline sector after disappointing trading updates from budget US carriers Spirit and Southwest.

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Other key stocks, including Paddy Power owner Flutter, also edged lower. Shares in the gambling giant sunk 3 per cent to €144.05, while other heavy hitters such as Kingspan also came under pressure.

Irish bank stocks, meanwhile, were mixed after the latest ECB rates decision. Permanent TSB slipped a further 0.5 per cent to €1.92 per share after the lender said on Wednesday that its share of new mortgage lending contracted in the third quarter.

Bank of Ireland advanced 1.9 per cent to €8.75 per share. The lender raised its net interest income forecast for the second half of the year and now expects it to be 5 per cent higher than the €1.8 billion posted for the first half after recent ECB hikes.

Moving towards the top of the index, AIB gained 2.4 per cent to €4.12 per share.

Europe

European shares pared earlier declines but struggled overall, with the blue-chip Stoxx 50 off by close to 0.6 per cent, while the pan-European Stoxx 600 index fell 0.5 per cent.

ECB policymakers kept its key interest rates unchanged on Thursday, following last month’s knife-edge decision to lift the rate.

“Unless there’s an external shock to energy prices, we think the ECB is done with hikes for the current cycle,” said Wolf von Rotberg, equity strategist at Bank J Safra Sarasin. “The first ECB cuts will likely only come in the second half of next year, with weaker data and softer markets before it gets better.”

Siemens Energy sank to a record low after seeking €16 billion in state aid. The meltdown in its shares on Thursday was the biggest drop for a stock on Germany’s Dax index since the collapse of Wirecard in June 2020. Its main shareholder, Siemens, dropped as much as 5.9 per cent.

BNP Paribas saw a sizeable decline after reporting disappointing earnings. Advertising giant WPP also edged lower after slashing its outlook for revenue growth.

London

The benchmark FTSE 100 dropped by almost 0.9 per cent while the mid-cap FTSE 250 declined 0.6 per cent amid gloomy earnings updates from some of the big British names.

Shares in Standard Chartered dropped 11.2 per cent to the bottom of FTSE 100 after the UK lender reported a 33 per cent tumble in third-quarter pretax profit due to a nearly £1 billion (€1.1 billion) hit from exposure to China’s banking and troubled real-estate sectors.

Unilever met market expectations for third-quarter sales growth after raising prices at a slower rate but failed to win back shoppers who traded down to cheaper products amid elevated inflationary pressures globally.

The Dove soap maker’s shares fell 2.7 per cent, while the personal care, drug and grocery stores index lost 1.7 per cent to hit its lowest since mid-November last year.

New York

Following its worst rout of 2023, the Nasdaq 100 dropped about 1 per cent on Thursday. The slide also pushed the S&P 500 closer to a “correction”, with the gauge down more than 9 per cent from its July peak.

Facebook parent Meta slumped after dashing investors’ hopes for a long-term advertising recovery.

United Parcel Service – an economic barometer – sank 5 per cent on a profit-target cut.

Meanwhile, investors digested new data showing the US economy grew at the fastest pace in nearly two years last quarter amid a surge in consumer spending. A closely watched measure of underlying inflation cooled more than expected to the slowest pace since 2020, reinforcing the case for a Federal Reserve pause next week.

Separately, Ford advanced after the United Auto Workers reached a tentative labour agreement with the automaker. – Additional reporting: Bloomberg, Reuters