European shares fall as investors gauge earnings, ECB keeps rates unchanged

FRANKFURT: European shares fell on Thursday as the European Central Bank kept interest rates unchanged but offered no clues about its next move, while investors weighed mixed earnings from a string of companies including heavyweights Shell and BNP Paribas.

The pan-European STOXX 600 edged 1percent lower, its steepest fall in over two years, retreating from Wednesday’s record close. The European Central Bank held rates at 2percent as expected and reinforced market bets that policy will remain steady for some time. “Inflation is in a good place,” said Christine Lagarde, president of the ECB. However, underlying inflation in the EU has cooled faster-than-expected, exacerbated by a strengthening euro.

“The ECB downplayed concerns about the euro’s recent strength against the dollar as it is not a new development and is already incorporated into their economic projections,” said Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management. The rate-sensitive real estate and construction sectors were down 0.8percent and 0.4percent, respectively.

Meanwhile, Novo Nordisk plunged 7.9percent after a Reuters report that Hims and Hers Health is launching copies of the Danish drugmaker’s Wegovy pill at an introductory price of USD49 per month.

Corporate reports were dominated by banks and resources companies as investors scrutinized earnings to gauge sentiment amid geopolitical uncertainty and a clouded macroeconomic environment.

Banking stocks plunged 3.5percent, weighing the most on the benchmark index. BBVA fell 8.8percent and weighed on Spain’s IBEX index as higher-than-expected costs overshadowed the bank’s higher quarterly net profit.

On the flip side, BNP Paribas rose 1.2percent after the euro zone’s largest lender by assets reported better-than-expected fourth-quarter profit. Mining stocks fell 3.4percent, with Aurubis down 2.9percent after Europe’s largest copper producer reported quarterly operating core profit below estimates.

Meanwhile, Glencore shares dropped 7percent and Rio Tinto’s London-listed shares were down 2.6percent after the latter said it was no longer in talks with Glencore about a takeover that would have created the world’s largest mining company. British oil major Shell slipped 3.4percent after missing fourth-quarter net profit expectations.

Regional technology stocks rose 0.9percent on the day, rebounding from Anthropic AI’s latest update which weighed on software companies, as Alphabet reported upbeat results and forecast a surge in 2026 capital spending. “As long as CapEx keeps growing, it’s the (companies) that are getting that CapEx that are going to keep winning, and today, that’s within tech; that’s the semiconductor names,” said Craig Cameron, portfolio manager at Templeton Global Equity Group. Defence stock Rheinmetall fell 6.5percent on signs of easing geopolitical tensions between the US and Iran.