Markets

Europe Markets Close Lower as Autos Stocks Lead Losses; Stoxx 600 Down 1.4%

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  • Thursday saw the European Central Bank keep interest rates unchanged in spite of record inflation levels across the euro zone.
  • The Bank of England, however, hiked rates in its first back-to-back interest rates rise since 2004.
  • Autos stocks led losses, shedding 3.8%. New data on Friday revealed that new car sales in the U.K. last month were 23% lower than pre-pandemic levels.

LONDON — Europe markets closed in negative territory on Friday as investors digested key updates from both the Bank of England and the European Central Bank the previous day.

The pan-European Stoxx 600 provisionally closed 1.42% down, with only the oil and gas sector in positive territory.

Autos stocks led losses, shedding 3.34%. New data on Friday revealed that new car sales in the U.K. last month were 23% lower than pre-pandemic levels.

Thursday saw the European Central Bank keep interest rates unchanged in spite of record inflation levels across the euro zone. The Bank of England, however, hiked rates in its first back-to-back interest rates rise since 2004. Major European bourses, including the French CAC index and Germany's DAX, dipped into negative territory on Friday, with the German index shedding 1.8%.

The ECB resisted pressure to raise rates at a time of unprecedented inflation, with the most recent reading hitting a record 5.1% last month. Christine Lagarde, the central bank's president, said on Thursday that although inflation was likely to remain elevated for longer than previously thought, the ECB expected it to ease throughout 2022.

Meanwhile, Bank of England Governor Andrew Bailey said on Thursday it was likely the BoE would need to raise rates again, after hiking its main interest rate to 0.5% in a bid to contain soaring inflation, which hit a 30-year high in the U.K. in January.

Investors are also weighing up fresh economic data out of the continent. Retail sales in the euro zone saw a month-on-month decline of 3% in December, but gained 2% from a year earlier.

German industrial orders grew 2.8% in December from a month earlier, data showed on Friday, whereas France saw its industrial output contract by 0.2% between November and December.

Across the Atlantic, U.S. nonfarm payrolls rose far more than expected in January, the Labor Department reported Friday. Nonfarm payrolls surged by 467,000 for the month, while the unemployment rate rose to 4%.

Stocks on the move

Swedish manufacturer Assa Abloy gained 6.98% after publishing a strong 2021 full-year earnings report.

Lenders Caixabank and Banco de Sabadell also moved toward the top of the index, adding 4.9% and 7.09% respectively. Oil giants BP and Shell both gained more than 3%.

At the other end of the Stoxx 600, Swedish medtech company AddLife was down by 26.3%, despite posting a 59% growth in earnings for 2021. The company announced on Thursday that its CEO, Kristina Willgard, would step down this year.

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