Earnings Optimism Wanes, European Markets End Lower

European stocks fell Thursday, with investor sentiment souring after the previous day's gains.

The Stoxx 600 closed lower by 1% today, with all sectors and major bourses in the red. Autos fell the furthest, shedding 2.7%, while tech stocks dropped 2.6%.

After trading in positive territory in the morning, the index turned when U.S. markets opened and tech stocks led the losses. Wednesday saw markets climb on earnings optimism following strong quarterly results from Nike.

The U.K. reported slower-than-expected economic growth for the third quarter of the year, according to the Office for National Statistics. Gross domestic product dropped 0.3% between July and September compared to 2021.

In Asia-Pacific markets, shares traded higher after being buoyed by optimism on Wall Street following a string of positive earnings reports.

The Stoxx 600 index in Europe closed 1% lower on Wednesday, with the optimism from earlier in the day on corporate earnings seeming to have been forgotten.

The DAX in Germany was the hardest hit, falling by 1.3%. This was followed by a 1% drop in the CAC 40 in France, and a 0.4% loss in the UK's FTSE 100. Both the auto and technology sectors saw a 2.5% decline.

Ed Smith, co-CIO of Rathbones, told CNBC that the market bottom has not yet been reached.

The firm's base case is that the current market rally is a bear market rally, and the five conditions necessary for a market turnaround have not yet been met.

Stocks opened lower on Thursday, with the Dow Jones Industrial Average down 313 points, or 0.94%. The S&P 500 declined 1.23%, while the Nasdaq Composite was 1.79% lower.

According to the CEO of Wienerberger, rising labor costs will add to inflation in Europe.

Heimo Scheuch, CEO of the building materials group, discussed the company's deal with Terreal and how it's coping with inflation on "Squawk Box Europe." He said that the company is doing well despite the challenges posed by inflation. He added that the deal with Terreal will help the company grow even more.

Deloitte was fined more than £900,000 ($1.1 billion) after failures in its audits of building material supplier SIG for the financial years 2015 and 2016, according to Britain’s accounting watchdog. This is a significant amount, especially considering the company’s size and stature.

The Financial Reporting Council said it imposed a penalty of £1.25 million on Deloitte, which was reduced to £906,250 once Deloitte admitted breaches over its work on the financial statements.

Deloitte was reprimanded and ordered to take action to prevent future breaches. This includes implementing better security measures and increasing transparency.

The dollar weakened on Tuesday as markets began to wind down ahead of the holiday period.

The U.S. dollar index fell early Thursday to its lowest level in seven days. By 4:20 a.m. ET, it was trading around 103.94.The euro strengthened against the dollar on Wednesday, rising to its highest level in more than a week.

The euro rose 0.47% against the dollar to hit $1.0655 in early trading, before paring some of its gains to trade around $1.0631 by 4:20 a.m. ET.

Despite the pullback, the euro remained at its highest level against the dollar since late February.

The German government has completed its takeover of utility company Uniper, according to a statement by the economy and finance ministries. The government now owns 99% of the shares, Reuters reported.

The move will see the embattled natural gas trader become a nationalized company.

The European Commission approved a bailout for Uniper on Wednesday, saying that the measure is aimed at restoring the company's financial position and liquidity in the wake of Russia's aggression against Ukraine and the resulting disruption of gas deliveries.

The U.K. economy shrank more than expected in the third quarter of 2022, according to the Office for National Statistics.

The economy shrank by 0.3% in the third quarter, according to revised figures from the Office for National Statistics. This is a downward revision from the original estimate of 0.2% growth.

Business investment in the third quarter fell short of expectations, dropping 2.5% compared to the second quarter of the year. Analysts had expected a 0.5% decline.

The headline figure for economic growth in the UK was brought down by slowdowns in manufacturing and construction, despite a marginal increase of 0.1% in the services sector.

Household disposable income fell for the fourth consecutive quarter, and was down 0.5%. This is a worrying trend, as it indicates that families are struggling to make ends meet. This is likely to have a knock-on effect on the economy as a whole, as people are likely to cut back on spending.

Oil prices rose as the U.S. National Weather Service predicted dangerous cold weather in the coming days.

Brent crude futures rose slightly to $82.63 a barrel, while U.S. marker West Texas Intermediate futures traded up slightly at $78.79 a barrel.

The end-of-year holiday season is expected to lead to an increase in jet fuel consumption.

The International Monetary Fund has voiced its support for the Bank of Japan's latest decision to widen its band of yield curve control tolerance. This move is seen as a positive step in ensuring stability in the Japanese economy.

Ranil Salgado, the mission chief to Japan at the IMF, said that the Bank of Japan's adjustment of yield curve control settings is a sensible step given concerns about bond market functioning and uncertainty around the inflation outlook.

Salgado said that clearer communications around modifications to the central bank's monetary policy could improve the BOJ's credibility and help anchor market expectations.

Destination Wealth CEO Michael Yoshikami said he expects market volatility to increase in 2023, but investors should not stay on the sidelines. He believes that there will be opportunities for growth despite the volatility.

"The key is to be boring," he said. "The alternative is to pull your money out of the market and put it in cash until the market comes back. This is a way for you to safely still be in the market in more defensive names while still being able to participate in the market if it rises."

He identified six large-cap stocks that investors can use as a safe haven.

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European markets are set to open higher on Thursday, following the gains seen in the previous session.

According to data from IG, the U.K.'s FTSE 100 index is expected to open 26 points higher at 5,517, Germany's DAX 33 points higher at 14,126, France's CAC up 21 points at 6,599, and Italy's FTSE MIB up 80 points at 24,163.

There are no major earnings or data releases today.