European markets close lower after U.S. retail sales data

European markets followed U.S. stock futures into negative territory on Tuesday after retail sales stateside came in stronger than expected, rigniting concerns that the Federal Reserve could keep interest rates higher for longer, and possibly even hike further.

The U.S. Commerce Department said retail sales climbed 0.7% in September, well above consensus estimates of a 0.3% rise in a Reuters poll of economists.

After a muted morning, the pan-European Stoxx 600 index fell 0.6% during afternoon trade, with mining stocks shedding 2.3% to lead losses as most sectors and major bourses sank into the red.

- Elliot Smith

Shares of Belgian mining company Umicore jumped 14% by mid-afternoon after the company cut its net capital expenditure target for 2026 and announced plans to build a new plant in Canada as it expands its battery materials production facilities.

At the bottom of the European blue chip index, Swiss drugmaker Lonza fell more than 15% after cutting its 2024 margin target following the departure of its CEO last month.

- Elliot Smith

The pan-European Stoxx 600 index was down 0.1% at around 12 p.m. London time, with utilities adding 0.6% while mining stocks dropped 1.7%.

German economic sentiment improved by more than expected in October, according to the ZEW economic research institute's monthly survey.

The ZEW economic sentiment index climbed to -1.1 points from -11.4 points in September, far outstripping analyst consensus of -9.3 in a Reuters poll.

- Elliot Smith

Ericsson shares were 8.2% lower at 10:30 a.m. London time after the Swedish telecom firm reported a 10% year-on-year fall in organic sales and a 28.9 billion Swedish Krona ($2.64 billion) loss for the third quarter.

CEO Börje Ekholm said the company expects macroeconomic uncertainty to continue into 2024, affecting the ability of its customers to invest. It did not provide guidance for coming year.

— Jenni Reid

The pan-European Stoxx 600 index hovered just above the flatline in early trade, with utilities adding 0.4% while basic resources shed 0.7%.

British workers' average earnings excluding bonuses grew 7.8% year on year for the three months to the end of August, down from an upwardly revised 7.9% in the three months to the end of July, the Office for National Statistics said Tuesday.

That marked the first fall for the regular pay metric — which is being closely monitored by the Bank of England as it assesses the inflation picture — since January.

Annual growth in private sector pay, a key measure in determining the persistence of inflation, fell from 8.1% to 8% in the three months to the end of August.

PwC economist Jake Finney said the underlying data showed that pay growth is softening and the labor market is loosening.

"Two years of high inflation combined with our long-term productivity challenges have left their mark on living standards. We expect to close the year with real pay lower than where it was in 2006," Finney said.

"This is equivalent to seventeen years of lost pay growth. We do not expect pay to grow meaningfully in real terms until at least 2025, once inflation has turned a corner."

Job vacancies in the three months to September fell to 988,000 from 998,000 in the three months to August, while provisional employer payroll data showed 11,000 fewer payrolled employees in September than the previous month.

"With the number of employees on payroll falling and wage inflation below expectations, this gives the Bank of England more reason to pause its interest rate increases," said Emma Mogford, manager of the Premier Miton Monthly Income Fund.

"If we are at peak rates, then a more stable outlook for interest rates could help the economy and stock market."

— Elliot Smith

Britain's FTSE 100 is set to open roughly flat at 7,630, Germany's DAX is also seen unchanged at 15,238, and France's CAC 40 is expected to open around 7 points lower at 7,015, according to IG data.

— Elliot Smith

Small-cap stocks were on investors' radar last week.

The Russell 2000 index turned in five straight days of gains for the first time since mid-July, according to CNBC analysis.

And so investors may want to consider that particular asset class, especially amid rising volatility, according to some fund managers and analysts.

Here's how to invest, with analyst favorites to consider.

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— Weizhen Tan