European stocks snap a nine-day winning streak

The pan-European STOXX 600 was 0.2% lower after touching a record high on Wednesday, as a lower-than-expected increase in U.S. consumer prices in April boosted bets for a September rate cut by the Fed

European stocks snapped a nine-day winning streak on Thursday, weighed by Germany's Siemens after a second-quarter industrial profit miss, while several automobile and energy stocks also declined on trading ex-dividend.

The pan-European STOXX 600 was 0.2% lower after touching a record high on Wednesday, as a lower-than-expected increase in U.S. consumer prices in April boosted bets for a September rate cut by the Fed, in a boost to global sentiment.

Siemens dropped 6.6%, to mark its worst day in more than two years, as the group's Q2 industrial profit dropped 2% and missed estimates after a slowdown at its flagship factory automation division.

The stock weighed on Germany's DAX while the wider industrial goods and services sector shed more than 1%.

The automobile sector was the worst-hit, down 1.2%, as Bayerische Motoren Werke and Daimler Truck lost 6.3% and 5.1%, respectively, upon trading ex-dividend.

The energy sector also dropped 1%, with oil major BP declining 1.5% on trading ex-dividend and Eni shedding 2.2% after Italy's Treasury sold a 2.8% stake in the energy group for 1.4 billion euros.

The hopes of lower borrowing costs later in 2024 have kept the STOXX 600 near record highs. Policymakers have hinted at a June rate cut, nonetheless the outlook beyond that remains uncertain.

European Central Bank (ECB) policymaker Martins Kazaks said the ECB is not in a hurry to ease policy, so subsequent moves could be spaced out to give time for assessment.

Nicolo Bragazza, associate portfolio manager at Morningstar Wealth said that as the European Central Bank lowers interest rates, high-dividend paying utility stocks are expected to benefit.

The utility sector has added 2% year-to-date, underperforming the benchmark STOXX which has gained 9%.

Bragazza added that consumer discretionary-related companies along with real estate stocks could see the immediate benefit of lower interest rates, while financials could take a hit as net interest margins narrow.