European Stocks Extend Losses after the ECB Cut Interest Rates

European stocks continued to post losses on Thursday after the European Central Bank (ECB) cut borrowing rates as expected, while investors analyzed corporate earnings to gauge the impact of US President Donald Trump's volatile trade plans.

The STOXX Europe 600 index was down 0.3%, but remained on track for a 4% gain this week. Other regional indices, such as those for Germany, France, Spain, and the United Kingdom, also fell between 0.2% and 0.8%.

The European Central Bank cut interest rates for the seventh time in a year, bringing the deposit rate to 2.25%, in a move to boost confidence in an already struggling economy as tariffs restrict trade and uncertainty weighs on consumption and investment.

“This may seem like a sensible strategy given the significant uncertainty surrounding the future of global trade relations, but given the economic backdrop, there is no reason for the ECB to hesitate,” said Natasha May, global market analyst at JPMorgan Asset Management.

The European benchmark index is down about 10% from its record closing high in March. Investors will be scrutinizing comments from ECB President Christine Lagarde at a press conference for hints on futures rates. 

US Federal Reserve Chairman Jerome Powell acknowledged that the country's economic growth appears to be slowing, but added that the Fed would wait for more data before changing interest rates, potentially triggering a widespread sell-off on Wall Street.

Shares of French luxury goods maker Hermès fell 2.9% after the Birkin bag maker reported a rare drop in quarterly sales, joining rival LVMH, which also reported below-expected sales earlier this week.

Analysts lowered their profitability forecasts for European companies as the tit-for-tat tariffs sparked by Trump's multi-front trade war have dampened global growth prospects, triggering market volatility reminiscent of the early days of the COVID-19 pandemic.