The European stock market fell on Friday. This week's decline was the biggest in three months. Investors studied both good and bad corporate earnings reports for the same day, and are also watching for new clues about interest rate prospects.
The Stoxx 600 index closed down 0.3%, with mining and auto stocks leading the decline, while technology stocks rose. The index fell 1.6% this week, its worst performance since mid-October last year.
In terms of individual stocks, Swiss automation and electrical technology supplier ABB recorded the biggest decline since October. After Temenos AG's full-year results and guidance exceeded expectations, the stock price rose. German chemical giant BASF's stock price fell after initial results fell short of expectations.
The point at which interest rate cuts began is still the number one concern of traders. According to the Bloomberg survey, analysts believe the ECB will correctly determine when to start cutting interest rates. They expect that interest rates will be cut four times this year by 25 basis points each, and they expect the first meeting of the year next week to keep interest rates unchanged.
The European stock market had an unfavorable start in 2024. Due to uncertainty about the central bank's monetary policy, market sentiment is still cautious. The market is worried, and it may be too early to expect interest rate cuts to drive the stock market to rebound at the end of 2023. Geopolitical risks also present resistance.
“The mood was somewhat sluggish at the beginning of this year, but the subsequent market decline was not as severe as expected,” said Diego Fernandez, chief investment officer at A&G Banco. He pointed out that since expectations of interest rate cuts are too high, last year's excessive rise has yet to be digested. “We are still cautious about the stock market.”
