FX.co ★ European stocks close lower

On Friday, European key stocks started declining. Market makers are wary of possible inflation growth and look forward to further signals from the US Federal Reserve.

At the time of writing, the STOXX Europe 600 index of Europe's leading companies fell by 0.74% to 440.02 points. Shares of Swiss pharmaceutical company Siegfried Holding AG are top losers among the STOXX Europe 600. They dropped by 5.3%.

Meanwhile, the French CAC 40 fell by 0.42%, the German DAX went down 0.68% and only the British FTSE 100 rose slightly by 0.31%.

Top gainers and losers

The shares of British clothes maker Joules Group PLC plummeted by 36%. Earlier, the company reported a significant drop in trading since its latest update. Thus, Joules Group PLC's management expects its losses for 2022 to be below market expectations.

Irish construction materials maker Kingspan Group's stocks rose by 6.6%. Earlier, the company said it was able to weather a sharp rise in production costs, which only slightly affected its margins.

The market capitalization of air carriers TUI AG, Deutsche Lufthansa AG, and easyJet PLC dropped by 4.51%, 4.49%, and 4.1% respectively.

The shares of Dutch food delivery service Just Eat Takeaway.com NV soared by 29.8%. The news came the day before that the company would sell a 33% stake in the Latin American joint venture iFood for 1.8 billion euros to the Dutch conglomerate Prosus NV.

Market sentiment

On Friday, European investors were focused on new signals from the US regulator.

The day before, some of the participants of the US Federal Reserve's meeting favored slower prime rate hikes as part of monetary policy tightening. At the same time, many other members stated that it would be better to keep the rate at a high level permanently to reduce inflation to the target 2%.

Federal Reserve Chairman Jerome Powell estimated that the interest rate is now at a neutral level. However, some participants of the meeting disagreed with him and believed that the rate was still below neutral.

This dilemma will probably be finally resolved next week. On Thursday, the annual economic symposium is scheduled in Jackson Hole. It will determine how significantly the Federal Reserve can tighten its monetary policy.

As for EU domestic statistics, the news came on Friday morning that German producer retail prices jumped by 5.3% month-on-month and 37.2% year-on-year in July. That one-time increase was the biggest since Germany began collecting data in 1949. Moreover, analysts had predicted a continued annual slowdown in the rate of producer price hikes to 32%.

Meanwhile, economic growth in the EU countries in April-June was recently revised downward from 0.7% to 0.6% on a quarterly basis.

According to the UK's Office for National Statistics, retail sales in the state unexpectedly increased by 0.3% in July. At the same time, the figure still shows an annual decline of 3.4% amid the struggle of local consumers with rising prices. Besides, analysts had predicted declines of 0.2% and 3.3% respectively.

The GfK consumer sentiment index in the UK in August plunged to minus 44 from July's minus 41, which was the lowest mark since the beginning of the survey.

Previous trading results

On Thursday, European stock indices rose dramatically amid a sharp rise in oil prices. Moreover, investors were assessing the minutes of the Fed July's meeting the day before.

Consequently, the STOXX Europe 600 index of Europe's leading companies rose by 0.4% to 440.76 points.

Meanwhile, the French CAC 40 gained 0.45%, the German DAX added 0.52%, and the British FTSE 100 advanced by 0.35%.

The key reason for an exponential rise of European indices the day before was a substantial increase in oil prices, i.e. 2%. In response to this event, Europe's energy index immediately soared by 1.8%, while shares of British Petroleum, Shell, TotalEnergies, ENI S.p.A. and Equinor ASA went up 2.6%, 1.6%, 2.4%, 2.1%, and 1% respectively.

Moreover, the Statistical Office of the European Union reported on Thursday that the final estimate of annual inflation in 19 eurozone countries accelerated to a record 8.9% in July from June's 8.6%, according to a preliminary estimate. The final figure was the highest since the beginning of the calculation of data.

The shares of African mobile operator Helios Towers PLC rose by 2.6%. Earlier, the company reported an increase in pre-tax losses in the first half of 2022 due to rising costs. Despite this, the operator increased adjusted EBITDA and revenues.

The shares of Swiss online pharmacy chain Zur Rose Group AG soared by 8.4% on Thursday. The company increased its net loss from January to June. However, it expects to reach the breakeven point on a key profit indicator a year earlier than it had previously announced.

The market capitalization of British touch-screen maker Zytronic PLC plummeted by 8.8%. The company said it expected revenues to increase by 5% year-over-year in fiscal 2022.

The shares of Dutch payment system operator Adyen N.V. fell by 3.7% amid weak semiannual results. Therefore, the company's net profit and revenue in January-June were below market expectations.