Europe midday: Markets turn red on macro, geopolitical concerns

(Sharecast News) - European stock markets dropped into the red by Thursday lunchtime, as concerns about a fragile global economy and geopolitical tensions hit sentiment.

Scaled-back economic projections from central bankers in the US and Switzerland were likely hitting risk appetite, while investors awaited the latest policy decision from the Bank of England at 1300 CET.

News of rising conflict between Ukraine and Russia was doing the rounds, after Ukraine allegedly attacked Russia's Engels strategic bomber base with drones. The base, which houses Russia's nuclear-capable White Swan bombers, saw a massive explosion and widespread fires, according to reports.

Despite an earlier flat start, the Stoxx 600 was trading 0.6% lower at 551.95 by 1224 CET, with losses of 1% of more registered in Frankfurt, Paris and Milan. London's FTSE 100, however, was down just 0.1%.

Market sentiment had initially lifted overnight on the back of dovish signals from Federal Reserve chair Jerome Powell on Wednesday evening.

While the Fed left interest rates on hold, Powell said that a predicted increase in inflation - due to an escalating trade war - would likely only be "transitory", with the dot plot still pointing to two interest-rate cuts this year. The FOMC did, however, lower its growth projections and raise its forecasts for inflation amid increased economic uncertainty.

Across the Pond, the Bank of England is widely expected to hold rates steady despite recent data showing a weak economy.

Meanwhile, Switzerland's central bank reduced its policy interest rate by 25 basis points to 0.25% on Thursday, marking its fifth consecutive cut since March 2024. The SNB anticipated moderate global growth in the coming quarters, but acknowledged heightened uncertainties, particularly concerning trade and geopolitical developments.

In equity news, German shipping giant Hapag-Lloyd fell 8% after reporting a 19% slump in annual group profit.

French food services company Sodexo dropped 20% after cutting growth forecasts on the back of slower growth in the North America.

UK-listed Prudential rose after hiking its dividend and accelerating its share buyback plan as it reported 10% annual profit growth, with financial results in line with group guidance.

In economic news, German producer prices were 0.7% higher year-on-year in February, up from January's 0.5% rise, but below the 1% increase analysts had been expecting.