European Markets Waver Amid Trade Tensions and Earnings Disappointment

European shares fell after the ECB cut interest rates amid trade tensions, with investors analyzing corporate earnings. The pan-European STOXX 600 index dipped, influenced by underperforming stocks like Hermes. Defence stocks saw significant losses, while Siemens Energy surged following a positive earnings forecast.

On Thursday, European shares continued their decline as the European Central Bank's rate cut failed to bolster confidence amid ongoing trade tensions. Investors closely examined corporate earnings reports for clues on the influence of U.S. President Donald Trump's unpredictable trade policies.

The European Central Bank reduced interest rates for the seventh time in a year, lowering the deposit rate to 2.25%. This move aims to bolster a struggling economy, hindered by trade tariffs and uncertainty impacting consumption and investment. According to Natasha May, a global market analyst at J.P. Morgan Asset Management, the ECB's strategy seems appropriate given the uncertain global trade outlook, although it could be more decisive considering economic conditions.

The pan-European STOXX 600 index fell by 0.3%, although it's poised for a weekly increase of 4%. Indices across Germany, France, Spain, and the UK also experienced declines between 0.2% and 0.8%. Notably, France's luxury retailer Hermes saw shares drop by 2.9%, following a rare sales miss, echoing reports from LVMH of unmet sales expectations. Analysts have revised down European corporate profitability forecasts due to fallout from Trump's trade confrontations, elevating market volatility reminiscent of early COVID-19 disruptions.

(With inputs from agencies.)