European stocks retreat on downbeat earnings; bucking global rally

Investing.com - European stock markets edged lower Thursday despite the U.S. inflation-induced global rally, as investors digested some downbeat earnings.

At 03:25 ET (07:25 GMT), the DAX index in Germany traded 0.1% lower, the CAC 40 in France dropped 0.2%, and the FTSE 100 in the U.K. slipped 0.4%.

Earnings weigh on European sentiment 

European markets are bucking the general positive mood Thursday, weighed down by some disappointing corporate news.

Siemens stock fell almost 2% after the German engineering group reported a 2% drop in second quarter profit at its industrial business, after suffering a slowdown at its flagship factory automation division.

Deutsche Telekom (OTC:DTEGY) stock fell 0.6% despite the German telecommunications giant backing its full-year guidance after delivering higher revenue in the first quarter.

EasyJet (LON:EZJ) stock slumped 6% after the budget airline posted a larger than expected pretax loss for the first half of the year even as it said inflationary pressures on the sector were beginning to ease.

This was some good news, with BT Group (LON:BT) stock surging 9% after the telecoms group nudged its dividend higher, achieving its £3 billion cost-cutting program a year early.

Europe bucks global rally

The losses in Europe, though admittedly quite small, buck the global trend, after Wall Street’s rally to new record levels overnight and then the associated gains in Asia.

The main catalyst was the April U.S. consumer price index rising below expectations, raising hopes the Federal Reserve can cut interest rates this year, likely starting in September.

Higher-than-expected U.S. consumer prices in the first quarter had resulted in a sharp paring of rate cut bets and even stoked some worries of an additional hike, which would have hit growth in the largest economy in the world.

The European Central Bank is expected to cut rates before the Fed, likely in June, and there are plenty of central bank speakers throughout the day, both in Europe and in the U.S., to provide further clues of their thinking regarding future monetary policy.

Crude rises after U.S. CPI, inventories

Crude prices rose Thursday, extending gains from the prior session in the wake of the U.S. consumer inflation release and a bigger-than-expected draw in U.S. inventories. 

By 03:25 ET, the U.S. crude futures traded 0.4% higher at $78.91 per barrel, while the Brent contract climbed 0.3% to $83.03 per barrel.

Oil markets have been boosted by the softer-than-expected U.S. CPI release, which has increased the prospect of lower rates, potentially lifting future global economic activity and thus oil demand.

Official data on Wednesday showed that U.S. oil inventories shrank a bigger-than-expected 2.5 million barrels in the week to May 10, increasing hopes that demand was improving in the world’s biggest fuel consumer, especially as the travel-heavy summer season approaches.

Additionally, gold futures fell 0.1% to $2,393.60/oz, while EUR/USD traded 0.1% lower at 1.0880.