Europe close: Stocks drift lower amid investor caution, mixed data
European shares trimmed morning losses but still finished slightly lower ahead of a week full of high-profile risk events, including central bank rate decisions in the US, UK and Eurozone and as investors digested a mixed bag of economic data.
Worth noting, equity strategists at StanChart and Morgan Stanley reportedly cautioning clients not to chase the recent rally in share prices.
The pan-European Stoxx 600 index slipped 0.17% to end the day at 454.40 with all regional bourses lower, tracking losses on Wall Street.
Asian shares were mixed, with the crisis surrounding Indian conglomerate Adani continuing to batter the firm’s stock after US short-seller Hindenburg issued a report hammering its financial practices.
" A glance at the calendar for the week would be enough to deter all but the most swashbuckling of investors from taking new positions, so it is hardly surprising to see some of the recent bullishness fade away," said IG chief market analyst Chris Beauchamp.
"Investors will have a better idea (we hope) about the outlook once the central bank decisions, job numbers and earnings reports are in the bag."
In the Eurozone, the annual rate of increase in Spanish harmonised consumer prices edged up from 5.7% in December to 5.8% for January (consensus: 4.6%).
Eurozone economic sentiment on the other hand rose to a seven-month high in January on more optimism across all sectors except construction, with inflation expectations among consumers and companies both sharply down.
The European Commission's Economic Sentiment Index rose to 99.9, above an upwardly revised 97.1 in December -- the highest value of the index since June 2022.
Greater optimism underlines expectations that an expected economic downturn in the 20 countries sharing the euro, if there is one at all, is likely to be shallow, despite the energy price and cost of living crises and the war in Ukraine.
The monthly survey showed inflation expectations among consumers falling to 17.7 from 23.2 in December, well below the long-term average of 20.0.
However, the German economy unexpectedly shrank in the fourth quarter, in a sign that Europe's largest economy will probably go into recession, albeit shallower than initially feared.
Gross domestic product decreased 0.2% quarter on quarter in adjusted terms, the federal statistics office said, versus expectations for no change.
In equity news, shares in Philips rose after the Dutch health technology company said final-quarter revenue beat estimates and that it was axing 6,000 jobs to restore profitability.