European stocks fell on Thursday after the Bank of England predicted that the UK economy would suffer its largest contraction in a century this year.
Though the bank held both its benchmark interest rate and the size of its bond-buying programme steady, it warned that the UK’s economic output would shrink by 9.5% this year and stay below its pre-pandemic levels until at least the end of 2021.
The pan-European STOXX 600 index (^STOXX) fell by around 0.4%, while London’s FTSE 100 (^FTSE) was 1.3% in the red.
Stocks in the UK were dealt a second blow by a series of weak company results, including from Glencore (GLEN.L) and ITV (ITV.L).
READ MORE: UK economy to have biggest annual decline in 100 years
Germany’s DAX (^GDAXI) declined marginally, while France’s CAC 40 (^FCHI) fell by more than 0.5%. Stocks fell by around 0.8% on Italy’s FTSE MIB (FTSEMIB.MI), as did shares on Spain’s IBEX (^IBEX).
“It was a tough morning for the FTSE 100, dealt blows from the Bank of England and some of Thursday’s reporting companies,” said Connor Campbell, a financial analyst at trading platform Spreadex.
“Keeping interest rates at a record low 0.1%, the Andrew Bailey-led central bank warned that the UK economy shrank by 20% in the second quarter,” he said.
Stocks in Asia had a similarly mixed trading session.
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Shanghai’s SSE Composite Index (^SSEC) rose by 0.26% on Thursday, while the Hang Seng (^HSI) closed more than 0.8% in the red in Hong Kong.
Japan’s Nikkei (^N225) fell by 0.4%, while the KOSPI Composite Index (^KOSPI) in South Korea climbed by around 1.3%. Australia’s ASX 200 (^AXJO) rose by almost 0.7%.
Futures were pointing to a slightly higher open for stocks in the US, even as a dispute about funding for the United States Postal Service raised the prospect of a further delay to lawmakers agreeing on new stimulus measures.
Futures on the S&P 500 (ES=F) rose by around 0.1%. Dow Jones Industrial Average futures (YM=F) climbed by around 0.2%. Nasdaq futures (NQ=F), meanwhile, were up by marginally.