European Shares End Marginally Lower as Energy Stocks Drop

By Pranav Kashyap and Shashwat Chauhan

(Reuters) -Europe’s STOXX 600 closed slightly lower on Wednesday as energy stocks tracked lower crude oil prices, while Germany’s SAP slipped on news that the U.S. is investigating the software developer over price-fixing claims.

The pan-European STOXX 600 index closed 0.1% lower after two sessions of gains.

SAP declined 2.4% after Bloomberg News reported late on Tuesday that the U.S. is investigating the company, U.S. IT services provider Carahsoft Technology and others in a civil probe for allegedly conspiring to overcharge government agencies over the course of a decade.

The oil and gas sector led losses among the major STOXX sectors, dropping 1.7%. Crude oil prices fell more than 1% as investors reassessed whether China’s latest stimulus plans could boost its economy and spur fuel demand in the world’s largest crude importer. [O/R]

On Tuesday, China’s central bank rolled out its most significant stimulus package since the pandemic to lift the economy out of its deflationary slump. This sparked a rally in European equities, with French luxury stocks such as LVHM surging the most.

This move by the PBOC was a surprise move and it happened at a time when particularly European cyclical stocks were very depressed,” said Frederique Carrier, head of investment strategy for RBC Wealth Management in the British Isles and Asia.

“So you had the situation of a positive catalyst on a fairly over-sold lineup of sectors.”

China-exposed sectors such as automakers slipped 1.3% after gaining more than 3% in the last two sessions.

Sweden’s central bank cut its key interest rate to 3.25% from 3.50%, as expected, and said that if the inflation outlook remained favourable it could ease policy faster in the months ahead. The Swedish benchmark closed 0.7% higher.

HSBC said it now expects the European Central Bank (ECB) to cut interest rates by 25 basis points at every meeting from October through to April next year given weakening economic data.

Among other notable stock moves, Valmet Oyj surged 11.7% after the Finnish engineering company secured an order worth more than 1 billion euros in Brazil.

Bavarian Nordic gained 3.9% after the Danish biotech firm said it had received a $63 million order from the U.S. government to produce additional bulk product and the final freeze-dried doses of its mpox and smallpox vaccine.

(Reporting by Pranav Kashyap and Shashwat Chauhan in Bengaluru; Editing by Subhranshu Sahu, Nivedita Bhattacharjee and Richard Chang)