By Callum Keown
European stocks closed lower on Thursday, as the Bank of England warned of a slower economic recovery from the COVID-19 crisis and investors digested a raft of earnings.
The pan-European Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP -1.01% index fell 0.7%, while the German DAX /zigman2/quotes/210597999/delayed DX:DAX -1.44% dropped 0.6% despite better-than-expected industrial data showing encouraging recovery signs for Europe’s largest economy. A profit beat by engineering giant Siemens /zigman2/quotes/205905025/delayed XE:SIE -2.09% helped mitigate the index’s losses, as did forecasts of a profit rebound from Adidas /zigman2/quotes/206448829/delayed XE:ADS -2.76% .
But the French CAC /zigman2/quotes/210597958/delayed FR:PX1 -1.22% slipped 1% and Spain’s IBEX 35 /zigman2/quotes/210597995/delayed XX:IBEX -1.69% index was 1.2% lower. Asian markets were also mixed overnight, despite the rally on Wall Street.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.7744% rose 0.3% against the U.S. dollar after the Bank of England said the U.K.’s economic slump would be less severe than previously expected. The central bank said it now expects the U.K. economy to shrink by 9.5% in 2020, from an initial forecast of a 14% drop. The stronger pound hurt the internationally-exposed FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.97% , which fell 1.2% in early trading. However, the BoE said it would take longer for the U.K. economy to recover its precrisis size than the BoE had initially predicted, warning it may now be the end of 2021 rather than the second half of next year. The Bank’s 15% surge in 2021, predicted in May, was revised down to a 9% rise.
German industrial orders surged 27.9% month-on-month in June, smashing economists’ expectations for a 10.1% rise, led by strong demand for domestic goods. Automotive orders rose 66.5% but still remained below February’s precrisis level.
Deutsche Lufthansa /zigman2/quotes/201210530/delayed XE:LHA +0.05% shares climbed 1.2%, despite the German carrier swinging to its largest-ever quarterly loss as air travel demand nosedived. The airline said it doesn’t expect passenger demand to return to pre-COVID levels before 2024. Bernstein analysts said the €1.5 billion net loss was better than the consensus by €280 million.
Glencore /zigman2/quotes/201400686/delayed UK:GLEN -1.79% stock fell 8% as the miner and commodities trader scrapped its 2020 dividend after posting a $2.6 billion net loss in the first half of the year. The loss was driven by impairments of $3.2 billion as a result of lower commodity prices.
ITV /zigman2/quotes/205378065/delayed UK:ITV +0.92% shares slipped 4% lower as the broadcaster’s pretax profits fell 93% in the first six months of 2020. The coronavirus pandemic hit advertising revenues and forced the company to halt production.