Investing.com - European equity indices fell Thursday, following on from the previous day’s sharp selloff on Wall Street as concerns grow over the U.S.′s deepening budget deficit.
The DAX index in Germany dropped 0.5%, the CAC 40 in France slipped 0.6% and the FTSE 100 in the U.K. fell 0.5%.
Wall Street selloff weighs
European equities have followed their American counterparts lower on Thursday amid concerns that a new U.S. budget bill would add to the country’s already large deficit, the prime reason for Moody’s cut of its top-tier credit rating late last week, citing the nation’s growing debt.
The House of Representatives is set to shortly vote on a sweeping tax-cut and spending bill, after a Republican-controlled house committee approved the bill.
The bill would extend Trump’s signature 2017 tax cuts, adding $3.8 trillion to the $36.2 trillion U.S. debt over the next decade, according to the nonpartisan Congressional Budget Office.
JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon said that he can’t rule out that the U.S. economy will fall into stagflation as the country faces huge risks from geopolitics, deficits and price pressures, Bloomberg News reported on Thursday.
Peace in Ukraine seems far away
Also weighing on sentiment was the diminishing chance of peace talks ending the war between Ukraine and Russia anytime soon.
President Donald Trump told European leaders in a private call on Monday that Russian President Vladimir Putin does not believe the war in Ukraine should end because he thinks he is winning, the Wall Street Journal reported on Wednesday.
The comment, which reportedly came during a conference call that included Ukrainian President Volodymyr Zelensky, as well as a number of European leaders, marked a notable shift from Trump’s past public statements, where he suggested Putin was open to peace.
Eurozone PMI data in spotlight
The highlight of the economic data slate on Thursday will be manufacturing and services sector surveys for May, and forecasts indicate that business activity in the eurozone and Germany has broadly been steady from the previous month.
These numbers will be a test on how businesses have been faring in the face of an uncertain trade environment.
EasyJet reports another loss
The European earnings season is slowing down, and the region’s corporate health has been better than initially feared, given China, a top customer for European firms, is striving to revive consumption.
EasyJet (LON:EZJ) reported a headline pretax loss of £394 million for the six months ending March 31, reflecting a modest year-on-year improvement, adjusting for the late Easter.
BT Group’s (LON:BT) full-year free cash flow rose 25% to £1.6 billion, supporting an increased dividend, despite declining revenue and handset sales at the U.K. telecom giant.
Italian insurer Assicurazioni Generali (BIT:GASI) reported an 8.9% increase in operating profit in the first quarter of 2025, driven by a substantial rise in its property and casualty segment.
Swiss food giant Nestle (NSE:NEST) is refocusing on the group’s core business after straying into segments like health supplements that "weakened the fabric of the organisation," CEO Laurent Freixe was quoted as saying in the Financial Times on Thursday.
Crude drops after U.S. inventories build
Oil prices fell Thursday as traders digested a surprise build in U.S. crude stockpiles, as well as uncertainty ahead of renewed U.S.-Iran nuclear negotiations and talk of an Israeli strike on Iran’s nuclear sites.
At 11:45 ET, Brent futures dropped 1.5% to $63.94 a barrel, and U.S. West Texas Intermediate crude futures also fell 1.5% to $60.67 a barrel.
The Energy Information Administration reported late Wednesday a 1.3 million-barrel rise in U.S. crude oil inventories, defying expectations of a 1.3 million-barrel drawdown and raising concerns about demand from the world’s largest oil consumer.
Both benchmarks retreated on Wednesday after reports that nuclear talks between Iran and the United States will take place on Friday in Rome.
Prices had jumped earlier on Wednesday following a CNN report that U.S. intelligence suggests Israel is preparing to strike Iranian nuclear facilities.