Europe closes under pressure as weakness on Wall Street weighs; UK budget, earnings dominate talk

Key Points
  • The pan-European STOXX 600 finished the day off 0.27 percent provisionally. Sectors, meanwhile, pointed in different directions
  • Crude prices rose following news that a major pipeline cut Canadian crude flows to the U.S.
  • U.S. markets came under pressure, as Wall Street awaited the latest minutes release by the Fed

European stocks ended slightly under pressure on Wednesday, as investors digested the latest U.K. budget announcements and news in the corporate earnings space.

The pan-European STOXX 600 dipped in late afternoon trade, finishing the day off 0.27 percent provisionally. Sectors, meanwhile, pointed in different directions by the close.

The U.K.'s FTSE 100 eked out gains of 0.10 percent by the end of trade, while France's CAC 40 failed to hold onto gains, finishing down 0.25 percent. Germany's DAX, however, sunk 1.16 percent.

Stocks overall came off their session highs, as investors took note of the movements seen on Wall Street. U.S. markets came under pressure before and around Europe's close, ahead of key economic releases Stateside.

Utilities was one of Europe's top performing sectors, along with retail and commodities. RWE came off its highs, closing up 1.2 percent, with the stock having benefited from the collapse of coalition talks in Germany, as analysts are now expected a looser energy policy. French rival EDF, meanwhile, rose 2.1 percent.

Travel and leisure came under pressure on the back of earnings news. Thomas Cook slipped 8.38 percent after announcing full year results that showed an 8 percent increase in earnings. Margins fell in the 2017 fiscal year due to a more competitive environment however.

Looking across the European benchmark, food travel firm SSP rose 8.4 percent after posting a 27 percent increase in underlying profits. At the other end, media group Schibsted tumbled over 6.5 percent after announcing a new share issue.

Akzo Nobel popped 1.27 percent after Japan's Nippon Paint made an all cash offer Tuesday to buy Axalta, Reuters reported; putting an end to Axalta's merger talks with Akzo Nobel.

Elsewhere, retailer Kingfisher rose 4.6 percent, after Jefferies lifted its rating and target price on the stock, while BTG tumbled 5 percent after JP Morgan cut its price target on the stock.

In commodity markets, oil prices maintained gains in later trade, on news that a major pipeline cut Canadian crude flows to the U.S. Brent hovered around $63, while WTI was above $57.50 at Europe's close.

UK budget takes the spotlight

Budget is about much more than Brexit: UK finance minister

Aside from individual stock news, investors paid close attention to the U.K. Wednesday, as Finance Minister Philip Hammond presented the government's latest budget. In his speech, Hammond stated that the U.K. would be setting aside £3 billion ($3.9 billion) for Brexit.

"The negotiations on our future relationship with the European Union are in a critical phase," Hammond said, at a time when the ruling Conservative party is facing challenges surrounding the economy and on a political front.

"We have already invested almost £700 million in Brexit preparations and today I am setting aside over the next two years, another £3 billion and I stand ready to allocate further sums if and when needed," he said.

Aside from Brexit, Hammond discussed the U.K.'s role in the technological space, as well as housing, debt and growth forecasts. The non-partisan Office for Budget Responsibility (OBR) predicted that Britain's GDP would grow by 1.5 percent in 2017 before slipping gradually to 1.3 percent over the next three years. The U.K. had been forecast to grow by 2 percent in 2017.

Sterling rose 0.4 percent by the market close, yet fluctuated against the dollar during Hammond's remarks. U.K. housebuilders slipped however, with Barratt Development, Persimmon, and Berkeley Group all closing off 1.9 percent or more each.

Overseas, the upcoming release of the Federal Open Market Committee's minutes are keeping U.S. investors on edge. The minutes from the Fed's last meeting are due to be published after Europe's close.