Source: Sharecast
The Stoxx 600 finished the day down 0.5% at 512.27, having gained 3.1% over the past five trading sessions and 5.7% over the past fortnight (as of Monday's close).
Losses were moderate across the continent, with the exception of London where the FTSE 100 dropped 1% with some heavyweight names under strong selling pressure.
Meanwhile, US stocks opened lower following eight days of gains for the S&P 500 and Nasdaq, fuelled by rising expectations that the Federal Reserve will begin loosening monetary policy at its next meeting in September. For now, investors are now choosing to scale back risk appetite until they see the minutes of the most recent Fed policy meeting and hear from Fed chair Jerome Powell at this week's Jackson Hole symposium on Friday.
Busy day on the macro front
Back on this side of the Pond, Sweden's central bank, the Riksbank, slashed interest rates for the second time this year on Tuesday, and indicated that "two or three more" cuts could happen this year if the inflation outlook remains the same. The Riksbank trimmed its key policy rate from 3.75% to 3.5%, as expected by the market.
The People's Bank of China kept its benchmark lending rates unchanged on Tuesday, in line with market expectations. China's one-year loan prime rate was kept at 3.35%, while its five-year LPR was unchanged at 3.85%, a month after it surprised markets by cutting major short and long-term interest rates in July.
In economic data, core inflation in the eurozone officially held steady for the third straight month in July, according to final estimates published by Eurostat. The core harmonised index of consumer prices came in at 2.9% year-on-year last month, in line with preliminary data released two weeks ago and matching the inflation rate of both May and June.
Construction output in the eurozone bounced back strongly in June after contracting the previous three months. Output increased by 1.7% over the month of June, following a 0.9% drop in May and 0.3% monthly declines in both April and March. This was the highest rate of growth since January 2023.
In Germany, wholesale price deflation eased to its lowest level in 13 months, in line with economists' predictions. The producer price index fell at a year-on-year rate of 0.8% in July, Destatis reported. While this was the 13th consecutive month of falling prices, the deflation rate halved from the previous month (-1.6%) and was the lowest level since July 2023.
Meanwhile, the Bundesbank said on Tuesday that it expects the German economy to avoid a technical recession and return to growth in the third quarter of 2024, according to the central bank's monthly report for August. After contracting by 0.1% in the second quarter, following a 0.2% expansion in the first, German GDP could "increase slightly" in the three months ending 30 September, the Bundesbank predicted, as consumer spending rises.
Market movers
BT Group slumped in London after competitor CityFibre announced a long-term broadband partnership with Sky. Under the new agreement, Sky will offer its broadband to people on CityFibre’s nationwide full fibre network.
Also weighing on the FTSE 100 were energy majors BP and Shell as Brent crude dropped 0.4% to $77.36 a barrel, edging closer to its lowest levels of the year.
European chip names like ASML Holdings, ASM International and BE Semiconductor Industries were performing well as chip investors gear up for the latest earnings report from titan Nvidia next week, while M&A activity in the sector was helping sentiment after AMD bought server maker ZT Systems for $4.9bn on Monday.
Danish biotech group Genmab was under the weather after JPMorgan analysts downgraded the stock from 'overweight' to 'neutral' and placed it on their negative catalyst watch list, citing "significant downside" to current consensus forecasts.
