Europe close: US GDP data hits sentiment; Orsted tanks

(Sharecast News) - European shares closed lower as US GDP and German inflation numbers dented sentiment, while shares in Danish wind farm giant Orsted tanked after it warned of a massive impairment on its US operations. The pan-European Stoxx 600 finished 0.15% lower at 459.13. All major bourses followed suit bar Britain's FTSE which bucked the trend with a 0.13% rise.

Investors were also digesting news that US economic growth was less than expected in the second quarter of 2023.

US gross domestic product expanded by just 2.1% between April and June, compared with the 'advance' estimate of 2.4% growth, according to the Bureau of Economic Analysis. However, it was slightly higher than the revised 2% growth seen in the first quarter.

In a separate announcement, the US private sector added fewer jobs than expected in August, according to the ADP Research Institute, as recent strong growth tailed off to levels not seen since before the pandemic.

"Yesterday's solid gains have given way to a more muted atmosphere today, but the sense of a slowing US jobs picture has been given a boost by the ADP report's miss this afternoon. With GDP data also softer there has been a further strengthening of hopes that the Fed won't be too keen to hike again this year, though any cuts in rates are still far off," said Chris Beauchamp, chief market analyst at online trading platform IG.

In a data-heavy day, economic sentiment in the eurozone fell a touch more than expected in August, according the Sentix economic sentiment indicator, which fell to 93.3 in August from 94.5 in July, versus expectations for a reading of 93.7.

German inflation recorded a slight fall in August, according to preliminary official data. Non-harmonised inflation fell to 6.1% in August from July's 6.2%. Consumer prices, harmonised to compare with other European Union countries, increased by 6.4%.

"Inflation was virtually stable in August, but the details matter ahead of the tightly contested European Central Bank rate decision next month. On that front, this report will count as a somewhat hawkish surprise, if only slightly," said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.

Meanwhile in Spain, headline inflation climbed by 0.3 percentage points in August, to 2.6% year on ear, matching the consensus.

In the UK, data from the Bank of England showed mortgage approvals and consumer lending both declined in July as elevated interest rates and the rising cost of living continue to wreak havoc with personal finances.

Net mortgage approvals fell to 49,400 last month, from 54,600 in June, broadly in line with economists' expectations.

Orsted tanks on US impairment warning

In equity news, insurer Prudential gained after posting a higher first-half operating profit, while sector peer Direct Line rose 1% after naming Aviva executive Adam Winslow as its new CEO.

Energy stocks were up on the back of higher oil prices, but Denmark's Orsted plunged by a fifth after the wind farm developer revealed it could take a massive hit on its US portfolio.

The company said three big wind projects had been "adversely impacted by a handful of supplier delays", and it was struggling to get expected tax credits, while rising interest rates also increased costs.

Real estate company Aroundtown surged on strong interim results, while Swiss train maker Stadler Rail was also up after reporting a strong rise in orders and cash flow for the first half of the year.

Reporting by Frank Prenesti for Sharecast.com