European shares slipped on Thursday, mirroring losses on Wall Street following the U.S. Federal Reserve’s signal of prolonged higher interest rates. Investors also awaited a crucial policy decision from the Bank of England.
The pan-European STOXX 600 index dropped 0.6% by 0808 GMT, with travel and leisure stocks leading losses with a 2.1% decline.
Wall Street’s tech-heavy Nasdaq experienced significant losses on Wednesday after the Fed, as expected, maintained key interest rates but revised economic forecasts upwards while warning that the fight against inflation was not yet over.
Sectors linked to commodities, such as mining and energy, saw over a 1% drop, primarily due to weakening metal and crude prices influenced by a stronger dollar.
The UK’s FTSE 100 fell 0.5% ahead of the Bank of England’s decision, expected at 11:00 a.m GMT, regarding whether to continue a series of rate hikes that began in December 2021. This decision followed data revealing an unexpected drop in inflation.
In other parts of Europe, the Swiss National Bank (SNB) left its policy interest rate at 1.75%, while Sweden and Norway’s central banks raised their key policy rates by a quarter of a percentage point. Swiss stocks gained 0.5%, while shares in Sweden and Norway fell by 0.8% and 1.0%, respectively.
Ocado shares declined by 7.2% after Exane downgraded the British online supermarket to “underperform,” citing concerns over subdued growth in its retail business, following its recent rally. However, retailer Next saw a 2.2% rise after increasing its annual profit guidance.
JD Sports climbed by 7.1% after announcing that it was on track to achieve higher annual profits, with a 12% increase in underlying sales driven by strong demand for branded footwear and apparel, despite consumer pressures from rising bills.