European Shares Decline Post-ECB Rate Cut Amid Trade Concerns
By Sukriti Gupta, Medha Singh and Shashwat Chauhan
(Reuters) -European shares closed slightly lower on Thursday after the European Central Bank eased borrowing rates as expected, while investors parsed corporate earnings to gauge the fallout of U.S. President Donald Trump's erratic trade plans.
The pan-European STOXX 600 index ended 0.1% lower, though clocked a more than 4% weekly jump in a holiday-shortened week.
Trading Volumes were relatively lower on Thursday ahead of a four-day weekend on account of Good Friday and Easter Monday.
The ECB cut interest rates for the seventh time in a year, bringing the deposit rate to 2.25% in a move to prop up confidence in an already struggling economy as tariffs curb trade and uncertainty weighs on consumption and investment.
"With so much uncertainty and inflation finally returning to target, the last thing the ECB wants to do is loosen too early and jeopardise that trajectory," HSBC economists said.
"And while looser policy can help counter a global slowdown, it can't do much to influence US trade policy or fix any associated damage to supply chains, or even push firms to borrow more to invest despite the uncertainty."
European earnings season was well and truly underway with France's Hermes losing 3.2% after the Birkin bag maker posted a rare quarterly sales miss, joining rival LVMH, which also reported sales below expectations this week.
Analysts have pared their forecasts for European corporate profitability as tit-for-tat tariffs have dimmed the global growth outlook, triggering market volatility that is reminiscent of the early days of COVID-19.
The STOXX 600 is down about 10% from its March record closing high, and more than 5% down from levels seen before Trump's now-delayed reciprocal tariffs sparked a global market rout.
U.S. Federal Reserve Chair Jerome Powell acknowledged that the country's economic growth appears to be slowing, but added that the Fed would wait for more data before changing interest rates, causing a selloff on Wall Street overnight.
Tech stocks and euro zone banks were the top sub-sector laggards in Europe on Thursday, down more than 1% each.
On the flip side, elevated crude oil prices lifted energy stocks 1.6% higher.
Siemens Energy jumped 10.5% after the German energy group raised its outlook for the current fiscal year and posted its best profit margin since being spun off from former parent Siemens AG.
Rentokil Initial rose 5% after the British pest control firm said its organic revenue increased nearly 2% in the first quarter.
(Reporting by Sukriti Gupta, Medha Singh and Shashwat Chauhan in Bengaluru; Editing by Mrigank Dhaniwala, Varun H K, Shinjini Ganguli and Ed Osmond)