European Stocks Close Lower as Bank of England Boost Fades; Stoxx 600 Down 1.8%

Kirsty O'Connor | PA Images | Getty Images

This is CNBC's live blog covering European markets.

European stocks closed lower on Thursday as the initial reprieve after the Bank of England stepped in to calm the markets seemingly faded.

The pan-European Stoxx 600 provisionally closed down 1.8%, with auto stocks dropping 5% to lead losses as all major bourses slid into negative territory. Only the basic resources sector gained, closing up 0.5%.

Sterling has stooped to record lows against the U.S. dollar in recent days, and slid once again on Thursday morning to trade just below $1.08 before recovering to around $1.095.

Global markets saw another volatile trading day on Wednesday, with stocks trading sharply lower as global markets sold off on economic concerns surrounding inflation and the growth outlook.

Market turmoil continued to hit the U.K., prompting the Bank of England to suspend the planned start of its gilt selling next week and begin temporarily buying long-dated bonds in order to calm the market chaos unleashed by the new government's so-called "mini-budget."

That move calmed markets in the U.S. yesterday, and that, in turn, pacified indices in Asia-Pacific overnight. U.S. stock futures inched lower in early premarket trading on Thursday, however.

European stocks fall as U.K. market turbulence continues

European stocks closed lower, with the blue-chip Stoxx 600 provisionally ending the session down 1.8% as weak economic sentiment and U.K. bond market volatility continued to weigh.

Auto stocks dropped 5%, with French auto firm Faurecia down 14.7%.

U.K. stocks Barratt Development — a property developer — and retailer Next both fell around 12%.

— Jenni Reid

BOE spends additional $1.55 billion on long-dated gilts

The Bank of England bought £1.415 billion ($1.55 billion) worth of government bonds with maturities of over 20 years, Reuters reported.

It is the second day of the bank's bond-buying scheme, launched to stabilize market volatility after a government budget announcement saw a historic rise in bond yields, which move inversely to prices. It bought £1.025 billion of gilts Wednesday.

The start of the program boosted gilt prices, though they began to fall again after Prime Minister Liz Truss said in a series of interviews that she would stick to her policies.

The 10-year gilt yield was trading at 4.121% at 3:20 p.m. London time.

— Jenni Reid

Stocks on the move: Rational up 15%, Barratt Developments down 12%

Rational shares jumped more than 15% by mid-afternoon trade to lead the Stoxx 600, after the German combi steamer and oven manufacturer raised its sales revenue and profit forecast for 2022.

At the bottom of the European blue chip index, British property developer Barratt Developments fell more than 12%.

- Elliot Smith

Semiconductor shortage set to ease in 2024, Porsche CFO says

Semiconductor shortages will continue to affect Porsche throughout 2023, according to Arno Antlitz, Volkswagen's chief financial officer, but supply should improve the following year.

"We expect a better supply in 2023, but we expect easing of the shortages only to kick in in 2024," Antlitz told CNBC's Annette Weisbach.

The comments were made as Antlitz reflected on Porsche shares making their stock market debut in Frankfurt.

— Hannah Ward-Glenton

Euro zone economic sentiment continues to deteriorate

The European Commission's economic sentiment indicator, which aggregates business and consumer confidence surveys, fell to 93.7 in September from 97.3 in August, its lowest point since November 2020.

Confidence plummeted across economic sectors amid a broad increase in inflation expectations, despite the European Central Bank's commitment to interest rate hikes in order to rein in soaring prices.

- Elliot Smith

Porsche shares rise in Frankfurt market debut

Porsche shares increased almost 2% above its IPO price in its stock market debut on Thursday, in what's being billed as one of Europe's biggest ever public offerings.

Shares in the luxury carmaker initially traded at 84 euros ($81) at the start of the day.

Shares had been priced at the top end of their range late Wednesday, putting the company value up to 75 billion euros.

Read CNBC's full coverage here.

— Hannah Ward-Glenton

Stocks on the move: Rational up 12%, Barratt Developments down 9%

Rational shares jumped more than 12% in early trade to lead the Stoxx 600 after the German combi steamer and oven manufacturer raised its sales revenue and profit forecast for 2022.

At the bottom of the European blue chip index, British property developer Barratt Developments fell more than 9%.

- Elliot Smith

CNBC Pro: Analyst says this FAANG stock is an evergreen winner — and investors should buy the dip

Tech stocks have had a difficult year so far but a Rosenblatt Securities analyst thinks the sell-off is an opportunity for long-term investors to buy the dip.  

"Stay away from the losers," he said, recommending "winners in the various secular battles and evolutionary battles" in tech.

Pro subscribers can read more.

— Zavier Ong

Stocks may continue this 'oversold bounce' over the next few days, Wells Fargo's Harvey says

Wells Fargo's Chris Harvey expects stocks to continue their upward move.

"The spike in short interest, retail selling skew, and BOE's action all suggest stocks will continue their oversold bounce for the next few days," he said in a note to clients Wednesday.

Stocks hit fresh lows earlier in the week, with the S&P 500 notching a new bear market. The sell-off was triggered by the Fed's latest rate decision last week, which some investors believe steered the market into oversold conditions.

As the cost of capital rises and prices hover near record highs, the consensus is increasingly coming to believe that a Fed-induced recession is unavoidable, Harvey said.

"We look at a recession like a car crash," he wrote. "You never know how bad it will be, but there is almost no 'better-than-expected' outcome — so policymakers need to be careful what they wish for."

— Samantha Subin

10-year Treasury yield drops the most since 2020

The yield on the benchmark 10-year Treasury note dropped the most since 2020 on Wednesday, despite briefly topping 4% earlier in the session, after the Bank of England announced a bond-buying plan to stabilize the British pound.

The 10-year Treasury yield last dropped 23 basis points to 3.733%, or the most it's dropped since 2020.

It hit a high of about 4.019%, a key level that was the highest since October 2008, earlier in the day before erasing those gains.

Yields and prices move in opposite directions. One basis point is equal to 0.01%.

— Sarah Min

European markets: Here are the opening calls

European stocks are expected to open in negative territory on Wednesday as investors react to the latest U.S. inflation data.

The U.K.'s FTSE index is expected to open 47 points lower at 7,341, Germany's DAX 86 points lower at 13,106, France's CAC 40 down 28 points and Italy's FTSE MIB 132 points lower at 22,010, according to data from IG.

Global markets have pulled back following a higher-than-expected U.S. consumer price index report for August which showed prices rose by 0.1% for the month and 8.3% annually in August, the Bureau of Labor Statistics reported Tuesday, defying economist expectations that headline inflation would fall 0.1% month-on-month.

Core CPI, which excludes volatile food and energy costs, climbed 0.6% from July and 6.3% from August 2021.

U.K. inflation figures for August are due and euro zone industrial production for July will be published.

— Holly Ellyatt

Copyright CNBCs - CNBC
Contact Us