Europe markets close 1.3% lower after U.S. data, Bank of England cut; banks tumble 4.5%

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August 1, 2024
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General view of the Bank of England building in London.

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LONDON — European markets closed lower on Thursday as investors processed a raft of central bank action and fresh U.S. economic data.

The pan-European Stoxx 600 index provisionally closed 1.29% lower. All major regional bourses and most sectors finished in negative territory. Banks shed 4.48%, while retail was among the only sectors to rise, adding 1.27%.

Europe stocks extended losses in the last hour of trading after new data stateside. Weekly initial jobless claims came in above expectations, while manufacturing data added to a broader picture of slowing economic activity. The Dow Jones Industrial Average fell as the data prompted concerns about the state of the U.S. economy.

Back in Europe, the Bank of England announced it was cutting interest rates, taking the key rate to 5% from a 16-year high of 5.25%. Markets had been pricing in a 61% probability of a 25-basis point cut ahead of the announcement. The Bank of England said that the Monetary Policy Committee voted for the cut with a five to four majority.

The BOE’s meeting comes in the wake of the U.S. Federal Reserve’s, which ended in a widely expected hold on rates. At his press conference, Fed Chair Jerome Powell said a rate cut in September — which traders view as near-certain — was “on the table,” as long as inflation data continues to support one. Powell appeared to rule out that the cut would be as large as 50 basis points, however.

In individual stocks news, shares of Rolls-Royce jumped more than 11% at one point to hit an all-time high before paring back some gains after the company reinstated its dividend and raised its profit forecast on the back of strong first-half results.

At the other end, French payments firm Worldline fell to the bottom of the benchmark, ending the day over 15% lower after it cut its 2024 outlook. Societe Generale was down close to 9% after it downgraded its outlook for its French retail activities even as it beat second-quarter earnings estimates.