FX.co ★ European Stocks Close Lower After Cautious Session

European stocks fell on Tuesday as investors exhibited caution ahead of critical economic data from the region, including inflation figures.

Analysts cautioned that the euro zone's economy, including its gross domestic product, could be adversely affected if Donald Trump were to win the upcoming U.S. presidential election in November, which added to market jitters.

Additionally, investor sentiment was dampened by a survey showing a sharper-than-expected decline in German investor confidence in July.

The pan-European Stoxx 600 fell by 0.28%, while the U.K.'s FTSE 100 declined by 0.22%. Germany's DAX closed 0.39% lower, France's CAC 40 dropped 0.69%, and Switzerland's SMI ended down 0.15%.

Other European markets also struggled, with Denmark, Finland, Greece, the Netherlands, Norway, Poland, and Spain closing lower. In contrast, Iceland, Portugal, Russia, Sweden, and Turkey showed gains, while Austria and Belgium remained flat.

In the U.K. market, Burberry Group and Severn Trent closed down by 5.3% and 4.8%, respectively. Other notable decliners included United Utilities, Glencore, Rio Tinto, Anglo American Plc, and Experian, which lost between 2% and 4%.

Shares of Ocado surged by 8.5% after the online grocer raised profit forecasts for its key technology division. B&M European Value Retail rallied by 4.3% after reporting a 2.4% revenue increase in Q1 FY2024 and expressing optimism about achieving profitable growth for the entire fiscal year.

Several other companies showed gains: JD Sports Fashion, DS Smith, Marks & Spencer, Airtel Africa, Kingfisher, Rolls-Royce Holdings, F&C Investment, Sainsbury, IHG, Ashtead Group, Mondi, Convatec Group, and NatWest Group rose between 1.2% and 3.5%.

In Germany, Porsche fell by 4.7%, while Hannover Rueck, Puma, Munich RE, Infineon, Mercedes-Benz, Bayer, Siemens Healthineers, Adidas, Volkswagen, BMW, and Deutsche Bank recorded losses ranging from 1% to 2.3%.

Hugo Boss plummeted more than 7% after the company lowered its full-year outlook due to a challenging second quarter marked by weakening consumer demand in key markets like China and the U.K. Commerzbank, on the other hand, gained approximately 3.35%, and Fresenius increased by 2.5%. HeidelbergCement, Merck, Sartorius, and Qiagen rose between 1% and 1.7%.

In France, Kering fell by 3.1%. Other decliners included ArcelorMittal, Hermes International, LVMH, TotalEnergies, L'Oreal, Dassault Systemes, Pernod Ricard, and Accor, which lost between 1% and 2.5%. SCOR plummeted after issuing a profit warning, citing a loss of €0.4 billion for the second quarter driven by reserve updates and continued negative experience variance. Meanwhile, Saint-Gobain, Safran, Unibail Rodamco, Legrand, Credit Agricole, and Edenred posted gains.

On the economic front, German economic confidence fell for the first time in a year in July due to weak exports, political uncertainty, and unclear future monetary policy, according to survey data from the ZEW economic research institute. The economic sentiment index dropped significantly to a four-month low of 41.8 in July from 47.5 in June, against a forecast of 41.2. However, the current situation index improved slightly, rising to -68.9 from -73.8 in June, exceeding the expected -74.3. "The economic outlook is worsening," ZEW President Achim Wambach noted.

Additionally, official data revealed that the euro area trade surplus declined to a four-month low in May due to weak exports. The trade balance posted a €13.9 billion surplus in May, down from €14.2 billion in April, marking the lowest surplus since January. In contrast, the trade balance recorded a €0.4 billion deficit in the same period last year. Exports decreased by 0.5% annually, reversing a 13.5% increase in April, while imports declined by 6.4%, reversing a 1.8% rise in the previous month.