European Stocks Close Lower Ahead Of Fed Policy Announcement

European stocks closed firmly down in negative territory on Wednesday with investors reacting to a mixed batch of earnings updates from the region, and looking ahead to the Federal Reserve’s monetary policy announcement later in the day.

It is very likely that Fed Chair Jerome Powell will signal additional rate hikes are not off the table, but the central bank will take a more gradual approach to rate rises based on incoming data.

Monetary policy announcements from the European Central Bank and the Bank of Japan are due on Thursday and Friday, respectively.

The pan European Stoxx 600 dropped 0.53%. The U.K.’s FTSE 100 ended 0.19% down, Germany’s DAX declined 0.49% and France’s CAC 40 drifted down 1.35%, while Switzerland’s SMI lost 0.43%.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Iceland, Netherlands, Norway, Poland, Russia and Sweden closed weak.

Ireland, Portugal, Spain and Turkiye ended higher, while Czech Republic settled flat.

In the UK market, Natwest Group ended 3.7% down. Natwest CEO Alison Rose quit today after admitting a “serious error of judgment” in speaking to a reporter about the banking affairs of arch-Brexiteer Nigel Farage.

Rio Tinto closed lower by about 3.1% after reporting its lowest first-half year profits since the pandemic.

Glencore and Anglo American Plc lost 2.6% and 2.2%, respectively. Lloyds Banking Group shed about 1.6% after first-half profit missed expectations.

Diageo, Croda International, Fresnillo, RS Group, Halma, Antofagasta, Reckitt Benckiser and Coca-Cola declined 1 to 1.7%.

Ocado Group soared nearly 25%. Rolls-Royce Holdings climbed 21.2% after unexpectedly raising its full-year operating profit forecast by around 45%.

Entain surged 4.7%, while IAG, Vodafone Group, Sainsbury (J), Frasers Group, WPP, Unite Group, BT Group, M&G, Kingfisher and Associate British Foods gained 1.3 to 2.4%.

In the German market, Puma rallied 5.5% after reporting 11% growth in second-quarter sales.

Fresenius moved up 2.1% and RWE gained 1.7%. Deutsche Bank ended 1.7% on lower earnings. Covestro, Deutsche Boerse and Vonovia ended higher by 1 to 1.7%.

MTU Aero Engines lost more than 2% after a warning that the Geared Turbofan inspection program will cause headwinds for its free cash flow.

Adidas, Porsche, Zalando, Mercedes-Benz, Siemens Healthineers, Volkswagen, Infineon, HeidelbergCement and BMW lost 1 to 2.2%.

In Paris, LVMH shares dropped more than 5% after the luxury goods giant reported a surprise drop in U.S. sales amid economic uncertainty.

Orange ended more than 2% down after consolidated net income declined by 378 million euros to 1.09 billion euros in the first half of 2023 on an historical basis.

Edenred, Essilor, Hermes International, Schneider Electric, Kering, Danone and Dassault Systemes lost 1.5 to 2.5%.

Carrefour gained nearly 3%. Stellantis climbed 2.6% and Publicis Groupe ended 1.6% up.

In economic news, France’s consumer confidence held steady in July after improving in the previous month, as the improvement in financial expectations was offset by a rise in fears of unemployment, survey results from the statistical office INSEE showed.

The consumer sentiment index stood at 85 in July, the same as in June. Moreover, the index remained well below the long-term average of 100.

Eurozone bank lending and money supply registered slower growth in June, reflecting the pass through effect of the rising interest rates, data released by the European Central Bank revealed on Wednesday. Credit to the private sector posted an annual growth of 1.5% in June following May’s 2.2% increase.