Europe stocks close 1.4% lower as investors digest U.S. rating downgrade

This is CNBC's live blog covering European markets.

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European stock markets fell Wednesday as global sentiment was pulled down by a U.S. credit rating downgrade.

The pan-European Stoxx 600 index closed 1.35% lower, with all sectors and bourses in negative territory. Mining and retail stocks were the biggest downward pressures on the index, both down around 2.7%.

European markets

Fitch Ratings cut the United States' long-term foreign currency issuer default rating Tuesday, pointing to "expected fiscal deterioration over the next three years." 

U.S. stocks were sharply lower after the downgrade, while Asia-Pacific markets tumbled Wednesday morning on the news — though economists suggest the fallout may be limited.

Investors also continued to digest earnings, which came in from firms including BAE Systems, Ferrari and Taylor Wimpey.

Euro zone inflation data beat expectations Monday, new growth figures showing economic activity picking up in the second quarter of this year.

Europe stocks close lower

The Stoxx 600 index fell for a second consecutive session Wednesday to a more than two-week low.

Germany's DAX and the U.K.'s FTSE 100 both declined by around 1.36% as France's CAC 40 dropped 1.26%.

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Stoxx 600 index.

— Jenni Reid

Economists doubt U.S. debt downgrade will have lasting impact

Global stock markets tumbled on Wednesday after ratings agency Fitch downgraded the United States' long-term credit rating — but top economists say there is nothing to worry about.

Goldman Sachs Chief Political Economist Alec Phillips was quick to point out that the decision did not rely on new fiscal information and is therefore not expected to have a lasting impact on market sentiment beyond immediate shock selling on Wednesday.

Phillips said the downgrade "should have little direct impact on financial markets as it is unlikely there are major holders of Treasury securities who would be forced to sell based on the ratings change."

Read the full story here.

— Elliot Smith

U.S. stocks open lower after Fitch downgrade

U.S. stocks opened lower on Wednesday after Fitch downgraded the long-term credit rating for the U.S.

The Dow Jones Industrial Average lost 126 points, or 0.35%, while the S&P 500 dropped 0.8%. The Nasdaq Composite shed nearly 1.2%.

— Samantha Subin

Vodafone announces roaming deal with 1&1; Telefonica Deutschland shares tumble 17%

Vodafone shares were up 2.7% in afternoon trading after the company announced a national roaming agreement with German telecoms company 1&1. The pair will provide 5G mobile coverage across Germany to 1&1 customers from the second half of 2024.

The partnership is exclusive and could last up to 18 years, the statement said.

Shares of Telefonica Deutschland, a rival mobile provider in Germany, plunged as much as 17% following the announcement. Losses retreated to settle around 14% in early afternoon.

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Telefonica Deutschland share price.

Vodafone is the largest pan-European telecoms company.

— Hannah Ward-Glenton

There are consolidation triggers apart from the U.S. debt downgrade, Allianz CIO says

Virginie Maisonneuve, global CIO of equity at Allianz Global Investors, discusses earnings season and the repercussions of Fitch Ratings' U.S. debt downgrade.

There are consolidation triggers apart from the U.S. debt downgrade, Allianz CIO says
There are consolidation triggers apart from the U.S. debt downgrade, Allianz CIO says

Volkswagen in talks with China electric vehicle startup; VW shares down 1%

Volkswagen is in talks with Chinese electric vehicle startup Zhejiang Leapmotor Technology for a possible collaboration, according to Chinese media outlet Cailianshe, as translated by Google Translate.

The German car manufacturer's Jetta brand is looking to buy a platform of electric vehicle technologies from Leapmotor, in partnership with state-owned Chinese carmaker FAW Group, the article says.

Shares of Volkswagen were down 1.1% and the automaker did not immediately respond to CNBC's request for comment.

— Hannah Ward-Glenton

Siemens health subsidiary down almost 7% on third-quarter operating profit

Siemens Healthineers fell to the bottom of the pan-European Stoxx 600 index in morning trade with a 6.8% drop following a third-quarter profit decline.

The company reported an unexpected drop in quarterly operating profit and highlighted that its cancer therapy-focused Varian segment was held back by delivery challenges.

Health-care stocks more widely were down 1.6%.

— Hannah Ward-Glenton

Roche sues Novartis subsidiary over lung drug patent

A subsidiary of Swiss drugmaker Roche, Genentech, accused a Novartis unit, Sandoz, of infringing one of its patents, according to a complaint filed in a New Jersey court Monday.

The patent covers the drug Esbriet, which is used as a treatment for certain types of lung disease.

Genentech said in the complaint that Sandoz's breach of the patent was "knowing, reckless, and willful" and had resulted in "significant damage " to its company.

Roche has previously attempted to sue Sandoz over the same drug, but the lawsuit was thrown out in March 2022 after a U.S. judge found that parts of the Genentech patents were invalid.

Sandoz said that it is aware of the lawsuit and will defend itself, in response to a request for comment by CNBC.

"Sandoz remains proud to have been able to provide US patients access to cost-effective, generic pirfenidone years earlier than would have been the case if it did not vigorously defend itself in patent challenges," a Novartis spokesperson told CNBC via email.

Shares in both Roche and Novartis were down 1.4% in the first hour of trading.

— Hannah Ward-Glenton

Goldman Sachs: U.S. ratings downgrade should have 'little direct impact' on financial markets

Fitch Ratings' decision to downgrade its sovereign rating of the U.S. to AA+ from AAA should have "little direct impact" on financial markets, Goldman Sachs said in a note.

The bank said it's "unlikely" that there are major Treasury securities holders who would be forced to sell based on the ratings change.

Fitch Ratings cited "expected fiscal deterioration over the next three years," an erosion of governance and a growing general debt burden as reasons for the downgrade.

U.S. stock futures opened lower Tuesday evening after the downgrade. Asia-Pacific markets also fell after the news.

— Hannah Ward-Glenton

Fitch downgrades U.S. long-term rating to AA+ from AAA

Fitch Ratings cut the United States' long-term foreign currency issuer default rating to AA+ from AAA on Tuesday, citing an erosion of governance and expected fiscal deterioration over the next three years.

In particular, the agency called out brinksmanship in Washington around debt ceiling negotiations earlier this year. President Joe Biden signed a debt limit deal on June 2, just days prior to the X-date of June 5 – the expected date when the nation could default.

"The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management," Fitch said.

Read more here.

-Darla Mercado

CNBC Pro: Want to play the EV boom? Citi names 4 battery stocks — including one it says has nearly 40% upside

The world is in the early stages of a long process of electrification, and the competitive landscape will favor battery makers, according to Citi.

Citi names its top global pick, saying it looks well positioned to benefit from long-term growth in the global electric vehicle market. It also listed three others.

CNBC Pro subscribers can read more here.

— Weizhen Tan

CNBC Pro: Here’s where to invest $100,000 right now, according to the pros

Despite concerns of an economic slowdown and rising rates, the stock market's strong start to 2023 has been dubbed one of the "most hated rallies in recent memory" by some commentators.

The S&P 500 is up nearly 20% this year primarily due to the outperformance of stocks such as Apple, Microsoft, Nvidia, Amazon, Meta, Tesla, and Alphabet. Investment bank UBS had previously estimated that the index's return would fall to only 1.6% without the top seven stocks.

Given this backdrop, investors with an investment budget of $100,000 might wonder where and how much to invest in each asset class. CNBC Pro sought advice from investment managers and wealth advisors on this matter.

CNBC Pro subscribers can read more here.

— Ganesh Rao

European markets: Here are the opening calls

European markets are expected to open lower Wednesday, according to IG data. Britain's FTSE 100 is seen to drop 39.5 points to 7,626.9, while Germany's DAX looks set to fall 137.6 points to 16,126.7. France's CAC is anticipated to dip 50.7 points to 7,357.3 points, and Italy's MIB looks to be down 193.7 points to 29,343.8.

— Hannah Ward-Glenton