LONDON — European stocks were mostly lower on Tuesday as global markets await the U.S. Federal Reserve’s interest rate decision.
The pan-European Stoxx 600 was preliminarily 0.3% lower after the closing bell in London, with most major bourses in negative territory. Sectors were mixed; among those in the green was the utilities sector, often seen as a somewhat stable investment amid market volatility, which was up 1%. Mining stocks, which is linked to critical minerals and rare earths, also closed the session 1% higher.
Spain’s IBEX 35 index, which has been on a bull run that’s seen it gain almost 40% since the start of the year, briefly topped the record high set in 2007 on Tuesday morning. The index closed 0.5% higher.
The U.K.’s FTSE 100, meanwhile, advanced through the session to hit an all-time high where it surpassed 9,700 points. It closed 0.4% higher.
The moves on Tuesday marked a reversal from the previous session, which saw stocks end higher amid hopes of Sino-U.S. trade tensions thawing. President Donald Trump and Chinese President Xi Jinping are due to meet in South Korea on Thursday.
Both sides appear to be in a conciliatory mood, having agreed on a framework for a potential trade deal which addresses China rare earths export restrictions, soybean purchases and TikTok.
“I have a lot of respect for President Xi, and we are going to come away with the deal,” Trump said Monday. The leaders are due to meet on the sidelines of the Asia-Pacific Economic Cooperation, or APEC, Summit.
Looking at individual stocks, Philips tumbled 6% after the U.S. Food and Drug Administration issued the medical device maker a warning over the standards in three of its manufacturing facilities.
Shares of Novartis fell 4.1% by the end of the session, after the Swiss pharmaceutical giant reported its earnings for the three months to September. The firm’s third-quarter constant currency sales grew 7% from the previous year, while net income jumped 25% year-on-year to hit $3.9 billion. Analysts had been expecting net income to come in at $4.4 billion, according to a consensus estimate compiled by LSEG.
In financial services, BNP Paribas‘ shares were 3.5% lower after the French lender reported group pre-tax profits of 4.28 billion euros, beating the 3.44 billion euros estimated by analysts, according to LSEG. The bank’s revenues for the period reached almost 12.6 billion euros, which was slightly lower than the 12.8 billion euros forecast by analysts. BNP’s third-quarter earnings report also flagged a “specific credit situation” during the quarter, which it said drove up the cost of risk in its Global Markets division.
Meanwhile, London-listed shares of HSBC were up 4.6% after the lender’s third-quarter earnings beat expectations.
Elsewhere, the Financial Times reported on Tuesday that the U.K.’s Office for Budget Responsibility (OBR) is expected to cut its productivity growth forecast by more than expected – which could add an additional £20 billion ($26.6 billion) to the hole in the country’s public finances. Finance Minister Rachel Reeves is already scrambling to fix a fiscal hole that could be as big as £50 billion when she delivers her critical Autumn Budget next month.
The British pound fell on Tuesday. It was lower against both the greenback and the euro, each down around 0.5%.
30-year gilt
The big event for investors this week is the Fed’s two-day meeting, which begins on Tuesday. The market is now pricing in a 96% chance that the U.S. central bank will announce a 25 basis-point rate cut this week, according to the CME Fedwatch tool.
Traders are also hoping for a signal from Fed Chair Jerome Powell on Wednesday that the central bank will cut once more at its final meeting of the year in December, given concerns about a weakening labor market.
The Fed is dealing with an economic data blackout given the ongoing U.S. government shutdown, with last week’s inflation report one of the few data pieces to be released recently.
— CNBC’s Pia Singh, Tasmin Lockwood and Hugh Leask contributed to this market report.
