Uncertain Interest Rate Outlook and Weak Industrial Production Weigh on European Stock Markets

The European stock market experienced a challenging day on Thursday. The prospect of only a possible interest rate cut in the USA this year weighed on sentiment. Additionally, industrial production in the Eurozone declined in April instead of rising as forecasted. Moreover, the previous month's production data was revised downward. While the tech-heavy Nasdaq in the USA reached new records, European stock markets moved into negative territory. Even the US producer prices, which rose less sharply than expected in May, couldn't halt the downward trend. The Eurozone's leading index, the EuroStoxx 50, closed down 1.97 percent at 4935.50 points. The French Cac 40 lost 1.99 percent, dropping to 7708.02 points, while the British FTSE 100 declined by 0.63 percent to 8163.67 points. The situation was further complicated by the recent meeting of the US Federal Reserve. Experts from Landesbank Baden-Württemberg described the interest rate projections as 'unsettling.' Although US Federal Reserve Chairman Jerome Powell labeled the unexpected decrease in inflation as encouraging, he emphasized the necessity for continued strong data. All sectors in Europe declined, with banking and automotive stocks being particularly impacted by looming European special tariffs on Chinese electric vehicles. Market expert Andreas Lipkow warned of potential Chinese countermeasures that could amplify the effects of the planned punitive tariffs. Cyclical sectors such as chemicals and raw materials also came under pressure. Norsk Hydro's stock lost 0.8 percent, despite Goldman Sachs resuming its 'Buy' rating with a price target of 93 Norwegian kroner. Analyst Matt Greene highlighted the company's leadership in 'green' aluminum, characterized by low-CO2 production and the expansion of scrap recycling capacities. Defensive stocks showed greater resilience. Pharmaceutical, media, and telecommunications stocks lost less than average. Media heavyweight Relx's stock reached a record high. In contrast, Telefonica fell significantly by 2.4 percent after Deutsche Bank lowered its price target and downgraded the stock to 'Sell.' According to analyst Keval Khiroya, Telefonica is one of the most expensive companies in the telecommunications sector.