European shares are poised to end the week on a lower note as investors grapple with the likelihood of high borrowing costs persisting for an extended period.
The pan-European STOXX 600 index edged down by 0.3% as of 07:45 GMT, following a decline of over 1% in the previous session. This decline came after the Bank of England (BOE), like the U.S. Federal Reserve, decided to keep rates unchanged but indicated that it doesn’t consider its job done in terms of rate hikes.
The STOXX 600 initially dropped as much as 0.7% before paring losses when preliminary data revealed economic contractions in France and Germany, raising expectations that the European Central Bank (ECB) might take a more accommodative stance.
Dean Turner, Chief Euro Zone and UK Economist at UBS Global Wealth Management, noted, “The ‘will they, won’t they hike’ debate is likely to be with us at least until the end of the year, but on the back of further evidence that inflation pressures are easing, the focus will soon turn to the timing of interest rate cuts.
In individual stock movements, AstraZeneca gained 2% after announcing positive results from a late-stage trial of its experimental precision breast cancer drug. Conversely, oil and gas group Vaar Energi fell 7.3% following HitecVision’s sale of a 6.3% stake in the company for $423 million.
Shares of eBay-backed online classifieds group Adevinta surged 18.4% after receiving a takeover proposal from a consortium led by Permira and Blackstone. However, shares of Stellantis, the parent company of Chrysler, slipped as labor negotiations between the Detroit Three automakers and the workers’ union entered the final hours before a potential expanded strike.
Additionally, Spain’s GDP grew by 0.5% in the second quarter, and UK retail sales showed signs of recovery in August. Investors are awaiting PMI data from the UK later in the day.