FRANKFURT: European stocks were little changed on Wednesday as gains in broader stocks outweighed declines in luxury and retail stocks, while investors monitored a tax cut bill in the United States.
The pan-European STOXX 600 closed slightly lower, with retail stocks weighing heavily on the market, down 0.8%. London’s JD Sports fell 10.6% to the bottom of the STOXX 600 after posting a 2% drop in first-quarter underlying sales and warned that higher prices in its key US market could hit customer demand.
LVMH, Hermes and Kering among others fell over 2% after luxury group Chanel reported a 4.3% drop in its comparable yearly sales.
On the flip side, tech shares were the biggest gainers.
German chipmaker Infineon’s 2.3% gain after it said it would work with Nvidia to develop chips for new power delivery systems inside artificial intelligence data centers provided a boost to the sector.
Meanwhile, worries about the lack of progress on trade deals as the clock ticks down to the end of US President Donald Trump’s 90-day tariff respite, as well as a sweeping US tax bill, raised concerns about the country’s fiscal health.
“You have some big questions like whether or not Donald Trump is going to be able to push this through huge uncertainty about what’s going on with tariffs and where the money to pay for these tax cuts is actually going to come from,” said Danni Hewson, head of financial analysis at AJ Bell.
“If the US economic health is less than sprightly, then investors in Europe will be very concerned.”
The STOXX 600, however, has recovered from its April slump, and is trading less than 3% away from its all-time highs.
An index tracking defence stocks was up 0.5% after Trump selected a design for the $175 billion Golden Dome missile defence shield on Tuesday.
Meanwhile, data showed British inflation surged by more than expected in April, including in key areas closely watched by the Bank of England, complicating its path towards gradual interest rate cuts.
Morgan Stanley raised its view on the European banking sector to “attractive”, citing better earnings potential from continued yield steepening.
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