European stocks fall; investors cautiously await ECB decision

© Reuters

Investing.com - European stock markets fell Thursday, as investors digested a deluge of quarterly corporate earnings ahead of the European Central Bank’s latest monetary policy decision.

At 03:45 ET (07:45 GMT), the DAX index in Germany traded 0.3% lower, the FTSE 100 in the U.K. dropped 0.2%, and the CAC 40 in France fell 0.2%.

The ECB is in focus Thursday, with the central bank widely expected to tighten monetary policy later in the session, lifting interest rates for the seventh time, following Wednesday’s lead by the U.S. Federal Reserve.

However, the size of the increase remains unclear. 

Most expect officials to lift the benchmark rate by a quarter-point to 3.25% following signs underlying inflation is stabilizing and credit conditions are tightening. But a larger hike of 50 basis points can’t be ruled out as headline inflation remains elevated at 7%.

The Fed delivered an interest rate hike of 25 basis points on Wednesday, bringing the federal funds rate range to 5%-5.25%, the highest level since August 2007, but also  signaled it could pause its year-long tightening cycle in June.

Ahead of the decision, the economic data slate includes the final services PMI for much of Europe as well as the Eurozone producer prices for March, which is expected to show a fall of 1.7% on the month, an annual increase of 5.9%.

The quarterly earnings season continued in full flow Thursday, with Shell (LON:RDSa) stock up nearly 3% after the oil major reported a hefty first-quarter net profit of $9.65 billion, topping forecasts, as strong earnings from fuel trading offset cooling oil and gas prices.

BMW (ETR:BMWG) stock fell 0.4% after the German carmaker warned of ongoing high costs and rising competition, with sales down 1.9% in Europe and 6.6% in China, while rival Volkswagen (ETR:VOWG_p) stock fell 0.6% after reporting a drop in operating profit.

ArcelorMittal (AS:MT) stock fell 1.2% after the world’s second-largest steelmaker reported a much lower first-quarter core profit figure than the previous year even as it said it had a "good growth" in the beginning of the year.

Anheuser Busch Inbev (EBR:ABI) stock rose 0.4% after the world's largest brewer reported higher-than-expected earnings, helped by sharply higher prices.

Capgemini (EPA:CAPP) stock fell 0.7% after the French IT consulting group reported weaker revenue growth in the first quarter versus the same period of last year, citing a tense economic environment.

Oil prices rose Thursday, rebounding after a three-day plunge on concerns demand in the world’s major consumers will be hit as interest rate increases stunt economic growth.

U.S. oil inventories continued to shrink, official data from the Energy Information Administration showed, falling just over one million barrels last week.

By 03:45 ET, U.S. crude futures traded 0.7% higher at $69.10 a barrel, while the Brent contract climbed 1% to $73.03.

Both benchmarks were trading down between 8% and 11% for the week, and were close to their lowest levels since December 2021.

Additionally, gold futures rose 0.2% to $2,041.10/oz, while EUR/USD traded largely flat at 1.1058.